Can i take out Roth funds in 2018 to make a deductible IRA contribution for 2017?

[PaulaM · Accepted solution]

You can withdraw contributions you made to your Roth IRA anytime, tax- and penalty-free. However, you may have to pay taxes and penalties on earnings in your Roth IRA. See the Schwab link below for when earnings and penalties apply.

Now assuming that you have made the Roth distribution of funds (taxable or not) and want to make a traditional IRA contribution, you could use the Roth funds as long as you have taxable income in the same amount of the traditional IRA contribution. In other words, it does not matter where the traditional IRA funds come from (savings, gift, windfall, etc) as long as you have taxable income as required by the IRS.

If you wish to do this, be sure to also check the IRS link below on traditional IRA contributions and make sure that you are eligible to deduct. There are limits based on filing status and whether you or a spouse is covered by a retirement plan at work.

https://www.schwab.com/public/schwab/investing/retirement_and_planning/understanding_iras/roth_ira/w...

https://www.irs.gov/retirement-plans/ira-deduction-limits