I will contribute to ira for the prior year to lower taxes. Then I will take a distribution of same amount within a week to buy a house. Legal? Waiting period needed?

[calvinromney]

Taxes will go down for the next year. So I want to lower taxes for this year and push them off until the next year. Is there a needed waiting period to keep the money in the ira for it to be “counted” as a contribution. It needs to be included on for 5498. This is prior to the cutoff for prior year contributions.

[JohnB5677]

Yes, you can do both of those things.  It is an interesting tax strategy. 

There's no minimum time before you can take a distribution of money from a traditional IRA.

Yes, it will be included in the 5498.  TurboTax and your broker will handle that, and it will be reported next year.

Yes, it is prior to the cutoff for last year.  You have until April 15th

Note:

• You can use 401(k) funds to buy a home, either by taking a loan from the account or by withdrawing money from the account.
• A 401(k) loan is limited in size and must be repaid (with interest), but it does not incur income taxes or tax penalties.
• While a 401(k) withdrawal is technically unlimited, it is generally limited to the amount of the contributions you made to the account and can avoid penalties if it is classified as a hardship withdrawal, but it will incur income taxes.

[SweetieJean]

Assuming it would be an early withdrawal, the maximum amount you can pull from your IRA for a first time * home purchase is $10,000. For that withdrawal you will receive a 2022 1099-R in early 2023, showing a code 1 in box 7 indicating that it's an early withdrawal, and therefore subject to taxes on the entire amount, plus a10% early withdrawal penalty on any excess over $10,000.

*The IRS considers you a first-time buyer if you haven’t owned a home during the last two years.

[dmertz]

To add to what Sweetie Jean said, the IRS considers you a first-time buyer if neither you nor your spouse have owned a home during the last two years.