Max age for IRA or Qualified Plan deduction
Retiree going back to work at age 70. Will be a 1099 in new occ, can he open up a ind-k, Sep or Dedutible IRA. Due to married spouses income they need to deduct and defer his income. He has no current qualified accounts in place, no RMD’s. Is there anything they(HE) can do.
Tks
SSJ
Permalink Submitted by Alan Spross on Fri, 2010-08-13 18:00
He could set up a SEP IRA and make the max owner contribution, but would also have to take RMDs from the SEP. Solo K would be more expensive to establish, but it would not avoid RMDs since he would be a 5% owner. A TIRA contribution cannot be made starting with the year he reaches 70.5. He may be able to contribute to a Roth IRA, but would not get a deduction.
Permalink Submitted by steve jackson on Mon, 2010-08-16 14:14
Alan
Just need clairification that he cannot make a deductable contribution to a SEP or IND (k) after age 70.5?
Thank you,
SSJ
Permalink Submitted by mk foss on Mon, 2010-08-16 16:41
You cannot make a contribution to an individual IRA after age 70-1/2. However, the owner-employee can make a SEP contribution regardless of age. The SEP is an employer plan – employer plans cannot discriminate against older employees.
Permalink Submitted by Mobey on Mon, 2010-08-16 19:03
Keep in mind though, while he can make contributions to the SEP of Indiv 401k after 70-1/2, he also has to take RMDs from them after 70-1/2. So he’s putting money in but also pulling it out.
Looking only at the new SEP or Indiv 401k, he can put more in than he has to pull out.
Permalink Submitted by Richard Stumpf on Mon, 2013-04-15 19:01
So I am reading that a TIRA contribution can’t be made in the year client turns 70.5? Is that also true of a spousal IRA?
Permalink Submitted by Alan - IRA critic on Mon, 2013-04-15 21:23
No TIRA contribution is allowed for the year the IRA owner reaches 70.5 or in later years. But a spousal contribution is allowed for the lower earning spouse if the IRA owner (lower earning spouse) has not reached 70.5 even though the spouse with the income is over 70.5.