Should I contribute to an IRA tjos uear
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gail0366
Returning Member

Should I contribute to an IRA tjos uear

I am retired, collecting a small pension and working part time.  My husband is 71, retired and collecting social security.  Due to the RMD of his IRA and my earnings in 2019, we are in a high tax bracket for 2019.  I will stop working in Sept. 2020 and do not plan on working in 2021.  I understand that we do not have to take the RMD from my husband's IRA this year.  So we should be in a lower tax bracket in future tax years.  Does it make sense for me to contribute to an IRA this year (2019) to reduce our tax bill this year?  Are there any drawbacks?

3 Replies
BillM223
Employee Tax Expert

Should I contribute to an IRA tjos uear

What is your age? "For 2019, if you’re 70 ½ or older, you can't make a regular contribution to a traditional IRA." See this IRS webpage.

 

Otherwise, there is no guaranteed upside or downside. You would get a tax deduction this year, but you would have to pay it back when you take the money out. Worse, if you invest in it the stock market and if the market declines before you take it back out, then you will have lost that principal.

 

We don't give out financial advice here (just tax help), but I would suggest you consider whether you might be better off having some readily available cash around in an after-tax account for emergencies.

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fanfare
Level 15

Should I contribute to an IRA tjos uear

If you are eligible for a deduction and skipping the 2020 RMD, it could make sense.

OR

consider a regular taxable investment account, or a Roth IRA.

gail0366
Returning Member

Should I contribute to an IRA tjos uear

Thank you for the quick response.  I am 65, so I am eligible to contribute this year.  I do understand the risks and would look for a conservative investment.  I will not need the cash for emergencies at this point.  Thanks again.

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