IRA contribution eligibility after 70 1/2
My friend’s husband is an active employee as a professor. He is turning 70 1/2 by the end of 2014. They are not eligible to contribute to Roth as the income exceeds the limit. He is also covered by 403b at his job. I understand that once one turns to age 70 1/2, one can not make a contribution to his regular IRA. They still would like to save in a tax sheltered account. Is there any way to accomplish that?
Thanks,
Julia
Permalink Submitted by Alan - IRA critic on Thu, 2014-01-09 17:14
Under those circumstances, the only IRA activity is limited to converting some amount from any TIRA he owns. But that would be taxable and would not add to his IRA balance, it would just make his IRA more valuable by shifting from a pre tax IRA to a Roth. This is probably best left to the year after he retires when his tax rate will be lower. Otherwise, he can check and make sure that he is maxing out his 403b contributions or 457b if he is offered one. 403b plans have more complex catch up contribution rules than other plans so he should check if he is eligilbe for those in the event he is already maxing his 403b salary deferrals.
Permalink Submitted by Julia zhai on Sat, 2014-01-11 21:56
Thanks Alan! He did max out his 403b contribution and 457b plna. His situation is that even after he retires, because the mass accumulated in all these pre-tax account, his tax rate will not be low as he also has nice pension plan, so does his wife. They converted as much as they can take from the tax liability point last two years.Thanks again.Julia