Make tIRA contribution to lower last year’s tax while taking RMD’s?

[LUNCHBRO]

Me 75yo already taking RMD’s for a few years. Wife 71yo starts RMD’s in 2026.
For the past few years I have been taking tIRA distributions and also doing Roth conversions up to the top of the 24% federal tax bracket. Last year I miscalculated and had unexpectedly high K-1 earnings in December which have put us well into the 32% bracket for 2024. (I know, good problem to have.)

It is my understanding that since both my wife and I have W2 earnings for 2024 we can each contribute $8000 to our tIRA’s for tax year 2024 before April 15th. Please correct me if I am wrong. I have run the federal taxes with and without the $16,000 deduction. Making the $16,000 tIRA contribution decreases our 2024 Federal tax by over $6000 or about 38% of the $16,000. (The lower taxable income increases our QBI deductions.)

I have already taken my RMD for 2025. Does it make any sense for us to put $16,000 back into our tIRA’s to reduce our 2024 taxable income if we expect our future marginal rates to be lower than 38% (Probably 24% or 32%)? Even if TCJA expires I don’t think we would be any higher than 35% federal bracket.

Am I missing something?

(I’ve been lurking here for a while and greatly appreciate the wisdom and advice of this forum. Thank you.)

[SnowBog]

It is my understanding that since both my wife and I have W2 earnings for 2024 we can each contribute $8000 to our tIRA’s for tax year 2024 before April 15th.

Only up to the amount of earned income (aka W2 earnings). So, its the lesser of $16k ($8k each) or your earned income.

[Makefile]

Post-70 1/2 traditional IRA contributions mess with subsequent QCDs in a way you may want to research first.

[retired@50]

It is my understanding that since both my wife and I have W2 earnings for 2024 we can each contribute $8000 to our tIRA’s for tax year 2024 before April 15th.

Only up to the amount of earned income (aka W2 earnings). So, its the lesser of $16k ($8k each) or your earned income.

SnowBog refers to the low end of the compensation scale for making a deductible IRA contribution. An important caveat, no doubt.

But... There may also be an upper income limit, depending on circumstances.
You didn't say how much your W2 earnings were, and whether or not you (or your spouse) were covered by a retirement plan at work.

Start at the link below to determine if you're both eligible to deduct an IRA contribution.
https://www.irs.gov/retirement-plans/ir ... ion-limits

Regards,

[SnowBog]

But... There may also be an upper income limit, depending on circumstances.
You didn't say how much your W2 earnings were, and whether or not you (or your spouse) were covered by a retirement plan at work.

Great point!

I assumed that people in their 70's probably weren't getting large paychecks... But bad to assume!!!

[LUNCHBRO]

Thanks for the replies.

We both had W2 income in 2024 in excess of $8000.

Neither of us was covered by pension plan.

I will have to investigate the possible future QCD implications.

[Flobes]

I will have to investigate the possible future QCD implications.

From Kitces: Coordinating QCDs With Post 70 1/2 IRA Contributions Under The SECURE Act

[retired@50]

Neither of us was covered by pension plan.

The "covered by a retirement plan" language on the IRS website also includes 401k plans, SIMPLE IRA, SEP IRA, etc.

Source: https://www.irs.gov/retirement-plans/ar ... ement-plan

Regards,