Can I take a distribution from my IRA in 2019 to pay for my IRA contribution for 2018?

[RWM]

I turn 701/2 in 2019 and will be taking RMD.  I want to know if I can use those funds to make the contributes to both my own and my wife's IRA's for 2018.

[DoninGA]

The distribution from an IRA is not taxable compensation so you could not use those funds as an IRA contribution.

[macuser_22]

In the year that you turn 70 1/2 and after, you can no longer contribute to a Traditional IRA at all.

You can still contribute to a Roth bun the funds must come from taxable compensation that you worked for (W-2 or self-employed income in most all cases).

RMD amounts  cannot be rolled or converted to any other tax deferred retirement account.

[RWM]

So I can use other funds (i.e. savings or salary) to make 2018 contributions and still take the RMD for 2019.  Is correct?

[macuser_22]

No.  You cannot make a Traditional IRA contribution at all only a Roth if that is what yiu are asking about.  Savings do not count.

Only W-2 income or self-employed income on a Schedule C will qualify for most people.
See IRS Pub 590A "What is Compensation"
<a rel="nofollow" target="_blank" href="https://www.irs.gov/publications/p590a#en_US_2018_publink1000230355">https://www.irs.gov/publication...>

[Critter · Accepted solution]

If you have sufficient earned income to cover the IRA contributions for you and your wife then yes, you can make the contributions ... you have until 4/15/19 to make the 2018 contribution.

[macuser_22]

That is not correct since the OP is over age 70 1/2 and is prohibited from making a Traditional IRA contribution.  They can still make a Roth contribution, but the question does not specify the type of IRA that they want to contribute to.

[Critter]

He is 70 1/2 in 2019 ... so a 2018 contribution will be the last one.

[RWM]

I turn 70 1/2 later in 2019 and I have sufficient earned income (W2 earnings) in 2018 to cover the 2018 traditional IRA contributions.

[Critter]

Then go for it.  

[macuser_22]

Correct for a 2018 contribution (I missed that is was 2018), but the money cannot come from the IRA.

[dmertz]

The RMD distribution from the IRA and the contribution to the IRA for 2018 are separate transactions.  One does not affect the other.

[joshrocha20]

I have the exact same situation for a Client of mine. He would like to have his RMD distributed and then used to fund his and his wife's IRA contributions for 2018. He turns 70 1/2 in 2019, so he is still eligible to make a 2018 IRA contribution before April 15th 2019.

As long as the RMD actually leaves the IRA (in my Client's case, it is moving to his taxable investment account), it doesn't matter where the funds come from to make the 2018 contribution. Money is fungible. It isn't as if the dollars distributed for the RMD are stamped with "RMD" and cannot be moved back to the IRA.

[macuser_22]

@joshrocha20 - Correct -  It does not matter which physically dollars are used or which pocket the money comes from as long as that much money was earned from working and went into one pocket.

[Anonymous]

indirectly you could use your 2019 distribution to fund your 2018 contributions.  before 4/15/19 take the 2019 distribution.  put the distribution into you or your wife's personal checking or savings account and then make the 2018 contributions from there before 4/15/19

what you can't do is roll a 2019 distribution directly into a 2018 contribution.