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| *Loan,banking and credit>>>tax accounting |
Can someone in distribution of an IRA take advantage of the new rule to deposit a tax refund to the account? |
If one is in required distribution, can they still direct deposit their tax refund to that account? The new option seems to make sense for other IRA's like the Roth but I didn't think it was possible to make a contribution to a traditional if you are in distribution. I know someone who is planning on taking advantage of the new option and I wondered if it won't cause a problem later. If the bank allows it (how could they stop it if the account number is valid?) is there a correction that can be made later? Any help would be appreciated A taxpayer who is required to take a minimum distribution from an IRA has reached the age of 70.5. After age 70.5, no additional contributions to a traditional IRA are allowed. The IRS is allowing taxpayers who receive a refund on their tax return to deposit refund money into their IRAs. However, this does not change the rule that taxpayers over the age of 70.5 may not contribute to a traditional IRA. A taxpayer over the age of 70.5 may contribute to a Roth IRA, and if the taxpayer had a refund, it may be deposited (in full or part) to the Roth IRA. If a taxpayer who is not allowed to contribute to a traditional IRA makes a contribution anyway, the contribution will be treated as an excess contribution subject to a 6% annual excise tax for each year that excess contribution remains in the account. |
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