Can an individual over the age of 59 1/2 take a $6500 IRA distribution and use it to make a $6500 contribution to their spouse's IRA account to reduce the tax bill?

[Hal_Al · Accepted solution]

Yes, you can do that; but probably shouldn't.

In most cases, it the math doesn't work out. It's just a wash. The $6500 distribution will be taxable (being over age 59-1/2 only eliminates the 10% early distribution penalty, not the tax). If you did it now, the distribution would be taxable on the 2017 return, but the contribution would get a deduction on the 2016 return (logistically your probably couldn't get it done by tomorrow).

That assumes you meet the other rules; AGI limits and having enough earned income.