I'm 73, my wife is 63. She took an IRA withdraw of $42,000 in Jan 2016. We are pass the 60 day payback. Can we open a new IRA for $6500 to reduce out tax bill?

[macuser_22 · Accepted solution]

For her - yes, for you - no since you are older than 70 1/2 and cannot contribute to a Traditional IRA.

However, you must have at least as much earned compensation (money that you worked for) as the contribution.  On a joint return either spouse that works can have the earned income.

[dmertz]

Some additional details:  For your wife to be able to contribute $6,500, either she must have at least $6,500 of eligible compensation or her eligible compensation must be less than yours and your combined eligible compensation must be at least $6,500.  You must also file a joint tax return if any part of the contribution is being supported by your eligible compensation.

Whether or not her IRA contribution will reduce your tax bill will depend on whether or not the IRA contribution is deductible, based on her (your combined) modified AGI and whether or not either of you is covered by a retirement plan at work.