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Old 04-04-2016, 07:00 PM
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Join Date: Apr 2016
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Traditional Ira Funding For 2015 Tax Yr

I have until April 18, 2016, to fund my traditional IRA, in order to reduce my 2015 taxes. I am 67 years old. I have two questions:

1. If I have to take a withdrawal later in 2016, will that negate the the
funding that took place prior to April 18 and thus negate the tax savings
for the 2015 return?

2. Since I am older that 59-1/2, will there be a penalty on any
withdrawals (I know I will have to pay income tax on the withdrawal if I do
not re-fund my IRA within 60 days).

Thank you.



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Old 04-06-2016, 02:54 PM
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1. If I have to take a withdrawal later in 2016, will that negate the the
funding that took place prior to April 18 and thus negate the tax savings
for the 2015 return?======>> I think so; in general, contributing as early as possible lets the money start growing tax-free soonerThe funding deadline for your IRA isn't until your tax filing deadline in April ? typictax filing deadline for 2015 isn't until April 15, 2016, you can make your 2015 IRA contribution up to that date. Even though, you get an an extension to file your 2015 tax return, the extension doesn't push back the deadline for contributing to your IRA.

2. Since I am older that 59-1/2, will there be a penalty on any
withdrawals =====>Withdrawals from an IRA made before the age of 59 1/2 are considered "early distributions" and may be subject to tax penaltiesSO, An IRA early withdrawal penalty is assessed on IRA distributions taken before you reach age 59 ?.Once you reach age 59 1/2 the penalty tax will no longer apply on your withdrawals. At that point, any withdrawal becomes ordinary taxable income to you. you do typically owe income tax on withdrawals


(I know I will have to pay income tax on the withdrawal if I do
not re-fund my IRA within 60 days).========>>>>>>CORRECT; The check has to be posted to your new IRA account within 60 days of its receipt to avoid taxes.One way to make the transfer free of tax is to initiate a direct, or trustee-to-trustee, transfer. Another way is to have the originating trustee write out a check to the new trustee and ferry it to the new trustee yourself .If you made nondeductible contributions to a your IRA, you don't need to pay income tax on contributions upon withdrawal, but you do pay income tax on withdrawals of investment gains.
You can't contribute to a traditional IRA after required minimum distributions begin after age 70 1/2



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Old 04-07-2016, 12:15 AM
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Join Date: Apr 2016
Posts: 2
Requesting Further Clarification

Let's say I deposit $6,500 into my IRA for 2015 and I do it on April 15, 2016. I report that contribution on my 2015 tax return and accordingly it reduces my 2015 taxes. Then later in 2016, I withdraw all or part of that contribution. If I don't return that distribution to my IRA within the 60-day time limit or roll it into another traditional IRA, then it counts as regular income for 2016. My question is, will taking a withdrawal in 2016 after April 15th affect my 2015 taxes or just 2016?

Thank you!



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Old 04-07-2016, 01:04 AM
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Quote:
Originally Posted by Jacquel48 View Post
Let's say I deposit $6,500 into my IRA for 2015 and I do it on April 15, 2016. I report that contribution on my 2015 tax return and accordingly it reduces my 2015 taxes. Then later in 2016, I withdraw all or part of that contribution. If I don't return that distribution to my IRA within the 60-day time limit or roll it into another traditional IRA, then it counts as regular income for 2016. My question is, will taking a withdrawal in 2016 after April 15th affect my 2015 taxes or just 2016?

Thank you!
Let's say I deposit $6,500 into my IRA for 2015 and I do it on April 15, 2016. I report that contribution on my 2015 tax return and accordingly it reduces my 2015 taxes. ======>>>>>>>>>>>Correct; You can contribute funds to your traditional IRA at any time during the calendar year, and you can make contributions to an IRA by the first deadline for your tax return without any extensions. For instance, IRA contributions for tax year 2015 are due by April 15, 2016.


Then later in 2016, I withdraw all or part of that contribution. If I don't return that distribution to my IRA within the 60-day time limit or roll it into another traditional IRA, then it counts as regular income for 2016. =====>>>>>>>>>.Correct as mentioned previously.


My question is, will taking a withdrawal in 2016 after April 15th affect my 2015 taxes or just 2016?---=========>>>>>>>>>>>>>>.Your 2016 return since you claimed the ira contributions on your 2015 return.as said
among the many benefits of IRAs is the fact that you can make prior year IRA contributions up until April 15 each year. you can make prior year IRA contributions up until the tax filing date. So if you meant to start an IRA last year but forgot, you can still open an account, fund it, and count the contributions for the prior tax year.



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