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Just did my mother-in-law's taxes. She turns 63 on Thursday. She's still working, thus has 'earned income' for the IRA contribution. She's in the income bracket where she's elegable for the full deduction for a traditional IRA. I curious if she can make a contribution and withdraw in the same year? IOW, she contributes $3500 (this year), but withdraws $2000 (which is already in there from last year's contribution)?

Seems like legal money laundernig or something like that to me :) Is there some stipulation about not being able to withdraw current year contributions or anything like that?

-Warthog
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... she's elegable for the full deduction for a traditional IRA. I curious if she can make a contribution and withdraw in the same year?

Sure - but why would you want to do that? The withdrawl is taxable income, so all you've accomplished is a one-year deferral of the taxes on the IRA contribution. The cost of that deferral is whatever fees and charges her custodian may have on the account.

It might make more sense if you were contributing to a traditional and withdrawing from a Roth. (But then again it might not - my brain is just a wee bit fried at the moment.)

--Peter
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It might make more sense if you were contributing to a traditional and withdrawing from a Roth. (But then again it might not - my brain is just a wee bit fried at the moment.)

But aren't you required to keep money in a Roth for at least 5 years before you can withdraw and take advantage of the tax advantages of the Roth?
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But aren't you required to keep money in a Roth for at least 5 years before you can withdraw and take advantage of the tax advantages of the Roth?

You can withdraw your contributions at any time without tax or penalty from a Roth. It's the earnings that need to stay in for 5 years and to age 59.5.

--Peter
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