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posted Apr 8, 2024 9:03:23 AM

Is IRA contribution allowed if I'm retired and withdrawing from the IRA

There are two parts to the question:

So here is my situation; I retired in late 2022 and began withdrawing from my IRA in 2023. However, since I did retire in late 2022 I received a bonus in early 2023 for my work in 2022. During my time with the employer I did participate in their 401(k) program.  Questions:

 

  1. Since I did earn income in 2023 am I allowed to contribute to my IRA in 2023 even though I withdrew amounts from the account? This payment will be made prior to April 15, 2024.
  2. The 2nd line on the IRA contribution screen asks how much of that contribution was made in 2024. Should I enter the whole IRA contribution in this line? Since all of it would be made in 2024 I enter the whole amount. When I enter the amount on the first line the deduction is recognized and the tax adjustment made. However, when I add the amount 2nd line (made in 2024) the IRA contribution is reversed out and tax calculations revert back to what it was previously. When I make the entry for my wife there's no issues; the contribution is recognized and tax adjusted accordingly. 

Thanks for any input .

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1 Replies
Expert Alumni
Apr 8, 2024 9:27:49 AM

Yes,  You (and possibly your wife) can make IRA contributions if you have earned income.

 

1. Yes, you can contribute $6,500 ($7,500 if over 65) to an IRA.

  • It can not exceed your net income.
  • Your wife does not have to work.

2. The 2nd line on the IRA contribution screen asks how much of that contribution was made in 2024. 

Should I enter the whole IRA contribution in this line?  - 

  • Yes

Since all of it would be made in 2024 I enter the whole amount. 

  • You are correct. for what you want to do, the first and second lines should be the same.

When I enter the amount on the first line the deduction is recognized and the tax adjustment made. 

However, when I add the amount 2nd line (made in 2024) the IRA contribution is reversed out and tax calculations revert back to what it was previously. 

When I make the entry for my wife there's no issues; the contribution is recognized and tax adjusted accordingly.

  • The adjustment should occur after yo click continue.

 Please contact us again with any additional questions or to provide some additional details.