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Level 1

I am retired, working part time. My wife is also retired but self employed. If we move $ to a traditional IRA to reduce taxes, when can we withdraw it without penalty?

We both draw social security and I get a small pension.  I would like to open a new IRA for each of us. The money is in a money market account right now.  If I do that, is there a minimum amount of time we must keep it in the IRA before we can pull it back out?

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Level 20

I am retired, working part time. My wife is also retired but self employed. If we move $ to a traditional IRA to reduce taxes, when can we withdraw it without penalty?

You must be under age 70 1/2 to contribute to a Traditional IRA and have at least as much earned compensation as the contribution.  For self employed that is net compensation further reduced by the deductible part of the SE tax.

If over 59 1/2 there is no penalty for withdrawing but the withdrawal would be taxable in the year withdrawn so there might not be any overall tax advantage - just shifting  the tax to the next year.

2 Replies
Level 20

I am retired, working part time. My wife is also retired but self employed. If we move $ to a traditional IRA to reduce taxes, when can we withdraw it without penalty?

You must be under age 70 1/2 to contribute to a Traditional IRA and have at least as much earned compensation as the contribution.  For self employed that is net compensation further reduced by the deductible part of the SE tax.

If over 59 1/2 there is no penalty for withdrawing but the withdrawal would be taxable in the year withdrawn so there might not be any overall tax advantage - just shifting  the tax to the next year.

Level 1

I am retired, working part time. My wife is also retired but self employed. If we move $ to a traditional IRA to reduce taxes, when can we withdraw it without penalty?

Thanks for the very quick reply and helpful info.