cancel
Showing results for 
Search instead for 
Did you mean: 
Highlighted
New Member

Will our taxes be any lower if my 62 year old wife takes $6500 from her 401k and puts it in her IRA acct, then takes that $6500 out of the IRA and pays down our mortgage?

She retired 3/31/2017 and is no longer earning income. Estimated income this year for us might be 92-95,000 vs app $115 last year. Our other deductions are fairly standard. 

1 Best answer

Accepted Solutions
Highlighted
Alumni

Will our taxes be any lower if my 62 year old wife takes $6500 from her 401k and puts it in her IRA acct, then takes that $6500 out of the IRA and pays down our mortgage?

No, that will not reduce your taxes, it will increase them if the 401k/IRA contributions were made with pre-tax money.. What you use an IRA distribution for has no effect on your taxes.

View solution in original post

3 Replies
Highlighted
Level 15

Will our taxes be any lower if my 62 year old wife takes $6500 from her 401k and puts it in her IRA acct, then takes that $6500 out of the IRA and pays down our mortgage?

"pays down our mortgage"
Mortgage principal is not deductible, just interest.
Highlighted
Alumni

Will our taxes be any lower if my 62 year old wife takes $6500 from her 401k and puts it in her IRA acct, then takes that $6500 out of the IRA and pays down our mortgage?

No, that will not reduce your taxes, it will increase them if the 401k/IRA contributions were made with pre-tax money.. What you use an IRA distribution for has no effect on your taxes.

View solution in original post

Highlighted
Level 15

Will our taxes be any lower if my 62 year old wife takes $6500 from her 401k and puts it in her IRA acct, then takes that $6500 out of the IRA and pays down our mortgage?

 No, assuming that you have earned income and are eligible to make the IRA contribution, the contribution is tax-deductible but the withdrawal is taxable so it's a wash. 

*Answers are correct to the best of my ability but do not constitute legal or tax advice.*
**If a post answers your question, choose it by clicking on "Mark as Best Answer".**