IRA Distribution question.

[arlo]

If you make an IRA contribution before 4/18/2018 for year 2017 can you turn around and cash it in later in 2018 without penalty? Client is over 59 1/2. She was on Obummer Care
and would have to pay back her premium tax credit if she does not take out an IRA. She will borrow money for the IRA and pay it off when she cashes it in.

[Burke]

Yes, there will be no IRS penalty. But the custodian may have some penalty on cashing it in, depending on what she put it in. Like a CD early withdrawal penalty? Back-loaded mutual fund or annuity? She knows it will be taxable income in 2018, I assume. So how is that going to affect the PTC next year?

[JohnH]

Why not just put it in a Money Market IRA at a financial institution? No transaction fees and no early withdrawal charges. Probably would take about 20-30 min to do if she walks into any bank or credit union.