Another IRA / Keogh question

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Subject Author Date Another IRA / Keogh question GJ 12-21-2006  Re: Another IRA / Keogh question wyu 12-21-2006  Re: Another IRA / Keogh question GJ 12-21-2006  Re: Another IRA / Keogh question Ernie Klein 12-21-2006
Posted by GJ on December 21, 2006, 11:25 am I'm 67 - my wife is 62. I am self-employed and my wife is a housewife. We file jointly. I have money in a Keogh and we both have Regular IRA's For the past few years we have had a lot of deductions that allowed me to take some money out of my Keoghs without any tax consequences. We have not been contributing to our regular IRA's, although I have each year put money in the Keogh. This year I find there are some taxes to be paid over and above the Self-employment tax. So I found we could eliminate that with a small contribution to the wife's IRA. Now this started me thinking and brings me to my point and question. I am playing around with the notion of taking a distribution from my Keogh and offsetting the tax consequence of that distribution with a contribution to my wife's IRA. The pros are we pay no additional taxes. I pull tax-free distributions from my Keoghs. We contribute to my wife's IRA, which adds 5 years to that money before the RMD kicks in. My question is what are the cons? Roughly it seems as if a $3000 distribution from the Keogh is offset by a $5000 contribution to the IRA. Does this make any sense or am I missing something. JW Posted by on December 21, 2006, 11:48 am You only can contribute to an IRA if you have earned income. I'm pretty sure distributions from retirement accounts do not count. GJ wrote: > Now this started me thinking and brings me to my point and question. > I am playing around with the notion of taking a distribution from my Keogh > and offsetting the tax consequence of that distribution with a contribution > to my wife's IRA. > ... > Does this make any sense or am I missing something. Posted by GJ on December 21, 2006, 11:59 am > You only can contribute to an IRA if you have earned income. I'm pretty > sure distributions from retirement accounts do not count. > > GJ wrote: >> Now this started me thinking and brings me to my point and question. >> I am playing around with the notion of taking a distribution from my >> Keogh >> and offsetting the tax consequence of that distribution with a >> contribution >> to my wife's IRA. >> ... >> Does this make any sense or am I missing something. > I am self-employed, does not that income count as earned income? Cannot my wife qualify for an IRA on my self-employed income? We file jointly. JW Posted by Ernie Klein on December 21, 2006, 6:42 pm wrote: > > You only can contribute to an IRA if you have earned income. I'm pretty > > sure distributions from retirement accounts do not count. > > > > GJ wrote: > >> Now this started me thinking and brings me to my point and question. > >> I am playing around with the notion of taking a distribution from my > >> Keogh > >> and offsetting the tax consequence of that distribution with a > >> contribution > >> to my wife's IRA. > >> ... > >> Does this make any sense or am I missing something. > > > > I am self-employed, does not that income count as earned income? Cannot my > wife qualify for an IRA on my self-employed income? We file jointly. > Yes and yes. As long as your earned income equals or exceeds the total amount contributed to both your and your wife's IRA it doesn't make any difference who employed you, self or otherwise, or where the actual money came from. See IRS pub. 590. http://www.irs.gov/publications/p590/index.html -- -Ernie- Similar Threads Posted Re: Should I dump some $$ in a keogh? December 20, 2006, 7:41 pm IRA along with Keogh contribution. December 21, 2006, 9:57 am Keeping Keogh while opening indy 401(k) December 20, 2007, 7:01 am IRA question January 8, 2007, 5:00 am 529 question January 11, 2007, 4:41 pm TVM Question, please help February 8, 2007, 4:33 pm S.S. Question, Please September 1, 2007, 8:40 pm 403(b)/457(b) question October 3, 2007, 4:24 pm Re: Another Soc Sec question October 30, 2007, 11:29 am RMD question January 17, 2008, 1:04 pm