Pension distribution
I’ve messed up my pension distribution and will be subjected to unnecessary tax because I had it sent to my savings account instead of a rollover IRA. I don’t need this money now but it will be taxed as regular income at my high tax rate since I’m still working full time.
Should I just deposit the total allowable amount to my rollover IRA now for the 2026 year? I started distributions April 2026 and it’s saying I can contribute $8600 to my rollover IRA.
Terry Says
Wait. You are not getting a “pension distribution”. Let’s clear that up first.
Second, did you move your money that was in an IRA into a new IRA at a new bank savings account? If so, you have 60 days to move it into an IRA. So if you did move it, and you are within 60 days just tell your new bank to make it an IRA rollover.
Now, if you took the money out of your IRA, YES, you will owe taxes on it. And consult your tax advisor, since maybe you should make an estimated tax payment during the year.
If you are still working, you can contribute up to $7500 this year (or $8600 if 50 or over) assuming you made that much in earned income (not dividends, interest, SS, etc).
You said you “started distributions in 2026.” Does that mean you are age 73, and took required minimum distributions? Did you calculate the annual amount based on the year-end value of your IRAs last December? If so, this withdrawal counts against your RMD for 2026.
I think it’s time for you to speak to a CPA or tax advisor to make sure you are doing things correctly.
