Traditional or Roth IRA

Forum|Forum|2 years ago
April 6, 2024
1 reply
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I am sole prop and owe$2500 in taxes and Turbotax suggested to get a $7500 traditional IRA therefore i will only own taxes on about $1400. Im 76 years old. Should in pay the $2500 or get the $7500 IRA. Thank you

KristinaK

I would suggest that you consider the following:

1. If contributing to the IRA, you would be saving $1100. And that is a good thing.
2. You would not have access to $7500 for a period of time. That might not be a good thing if you need that money to live.

3. You will be required to make a Required Minimum Distribution (RMD), so it is possible that the entire $7500 will have to be distributed in 2024. Basically, you will be deferring payment of taxes for a year.

The benefits of contributions to a Traditional IRA after reaching age 73, diminish to a certain degree.

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