IRA Contribution/ Distribution
I have a client who does not work but his wife does. He has contributed $3,000 to an IRA every year. However, this year 2013 he took a distribution of $33,000 from an IRA he is 65. Can he contribute $3,000 to an IRA for 2013? My tax software says yes.
Permalink Submitted by Alan - IRA critic on Thu, 2014-04-03 22:25
Yes, he can make a spousal contribution using his wife’s earned income if sufficient. Whether he can deduct it or not depends on their joint income if his wife is covered by a plan at work. The distribution does not affect his contribution amount, but it will increase their modified AGI for purposes of being able to deduct the contribution if she is covered by a plan at work. If their modified AGI for 2013 is under 178k including the distribution, he can deduct the contribution whether his wife is covered or not.
Permalink Submitted by Geore Ferenzi on Fri, 2014-04-04 14:44
Thank you I had a feeling that was the correct rule. I do know after 70 i/2 if your drawing you no longer can contribute.