Tax Deferring of retirement fund income before 4/15/22
How much can I put into a retirement fund (like Roth IRA) for 2021 to avoid taxes on that money? I closed out a 403 retirement fund with a prior employer to use the funds to make home improvements in order to sell the house for more. Can I replace those funds (and add the equity from the house I received) to avoid being taxed at a higher rate? What is my maximum allowed to put into a retirement fund for 2021 I guess is my true question? Thank you Terry, I love listening to you on WGN.
Terry Says
That depends on your income — and your age.
If you have NO earned income but just interest, Social Security, or perhaps gains on assets, then you CANNOT contribute to an IRA.
If you do have earned income in 2021, you could contribute $6,000 (or $7,000 if over age 50) if you had that much in EARNED income. BUT DO THAT IMMEDIATELY. While the tax return deadline is April 18th, the IRS says the IRA contribution deadline is April 15th. And the banks will be closed for Good Friday. So just open a simple traditional IRA at your bank tomorrow and put it in a money market account if you want to get the deduction on your 2021 return — and again, that’s assuming you qualify with earned income.
Since you closed out your 403(b) you cannot return that money.
