if I make a previous year TIRA contribution, can I immediately withdraw it ?

Forum|Forum|4 years ago
March 16, 2022
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Is it legal for a taxpayer (who is in their 60s and eligible to make a fully-deductible TIRA contribution) to shift taxable income from last year to the this year by making a previous-year TIRA contribution and immediately withdrawing it ?

In other words, when filing my 2021 tax return in April 2022, I would make a Traditional IRA contribution, thereby reducing my 2021 taxable income by $7000. Then later in 2022 (or immediately) I would withdraw the money, adding $7000 (assuming no growth or decline of value) to my 2022 taxable income.

Is this legal ?

T

ThomasM125

It is not illegal. However, you will have taxable income for tax year 2022 for the distribution you took, so it would only work once to defer taxes on your income.

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