Start 72t in 2011 and take Deductible IRA for 2010 OK
L1: Start 72t in 2011 and take Deductible IRA for 2010 OKAn early retiree, I am considering starting a 72t withdrawal later this year when some CDs mature and I have cash available for the withdrawal. I just did my taxes and am also considering putting my little bit of earned income $700into a deductible IRA for 2010. The contribution would be made in March 2011, it would increase my 72t basis for withdrawals a bit, and save me a bit on my tax bill. Will this 2011 contribution for the 2010 tax year prevent me from starting a 72t withdrawal later in 2011, say in April or May?Thanks for any advice you can offer.2011-02-21 19:44, By: Kathy, IP: [184.108.40.206]
L2: Start 72t in 2011 and take Deductible IRA for 2010 OKShouldn’t create any problems. Merely make sure that you start the SEPP plan after the deposit is credited and showws up on the statement.2011-02-21 20:09, By: Gfw, IP: [220.127.116.11]
L3: Start 72t in 2011 and take Deductible IRA for 2010 OKIt doesn’t make sense to me. Too small an amount. If you will be in the same tax bracket for 2011 as 2010, it makes even less sense to me.
I would just keep my money, and not make the IRA contribution. At 25% tax saving, its only $ 175 saved, and you have tied up $ 700 for 8 years. If you do not need the $ 700, then delay your SEPP until later in the year. You could still take the full year’s amount at any time, even if you wait until Nov or Dec.
This gives you plenty of time to do some cash flow and tax planning for 2011.2011-02-21 20:42, By: dlzallestaxes, IP: [18.104.22.168]
L4: Start 72t in 2011 and take Deductible IRA for 2010 OKOn the surface I agree w/DLZ that putting $700 into the IRA for 2010 and then starting withdrawals in 2011 doesn’t make sense. DLZ cited the 25% tax bracket but, depending on the other elements of your family tax situation, you could be in the lowest bracket of 10% and the savings is only $70. If this is the case you don’t seem to gain anything by making the 2010 contribution. But of course we don’t know your complete tax situation.Jim2011-02-22 14:27, By: Jim, IP: [22.214.171.124]