When do you turn 50? My client's birthday is 1/1/57. She made a $5,000 contribution to her traditional IRA for 2006. Bank make her take back $1000 because she wasn't 50 years old. My software (Creative Solutions) allows a $5M deduction. I've looked everywhere - even checked with NAPT - and could not find anything to substantiate the $5M contribution. I know Jainen would go with the $5M (he said so on the other board) but I'd like to see it in writing. Any help here? Jainen, I even checked Pub 501, and they only refer to being considered 65 if born before Jan 2.
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My first thought
is that if you turn 50 in 2007, then you could not apply the contribution to 2006, even though you have until 4/15 to make the contribution. -
IRA Contribution- Jan 1 Bday
I don't have the cite, but I believe if your birthday is January 1, then the you are correct, it does count for 2006. Remmeber it only becuae I thought it was a strange rule.
You could change the birthdate to Jan 2 in your software, and this should bare out as well.Comment
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Good idea. Change the date to 1/2 and see what the puter tells you.Comment
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Ira Contribution
Yes, I did put in the birthdate 01/02/57, and the '06 contribution was $4000.
I would still like to see something in writing to take to the bank.Comment
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Interesting
the age test for a dependent exemption considers the child 19 on the anniversary date. So a child born on Jan 1 is not considered 19 until Jan 1.
The wording for an IRA contribution is similar "For individuals who have reached age 50 before the end of the taxable year, the maximum contribution amount is increased by____ ".
I would say the bank is correct. How unusual!Comment
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Found this
Code Sec. 219(b)(5)(B)(i)
In general. In the case of an individual who has attained the age of 50 before the close of the taxable year, the deductible amount for such taxable year shall be increased by the applicable amount.Comment
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