I have not been paying attention. At the end of calendar year 2026, I will be 77. As I understand, the rules were changed a few years ago, and now I can still make a contribution to my traditional IRA even though I will have a Required Minimum Distribution (RMD) for 2026? I do have earned income for 2026.
So I need to sharpen up my pencil to figure out if its worth it. I believe I have until April 15th 2027 to make my 2026 contribution??
My plan is to only take out the RMDs each year and pass the traditional IRA on to our heirs.
Yes, there is no longer an age limit on making IRA contributions, as long as you have earned income.
You are still subject to income limits for deductibility or eligibility for Roth contributions. Even if you don’t meet the limit for deductibility, you can make a non-deductible contribution to your Traditional IRA. That will necessitate you calculating the basis of your account each year so you won’t be taxed again on contributions you already paid taxes on.
If @blacktreechaser doesn’t already have a Roth IRA set up, at 77, it’s pretty late to start one. He (or his beneficiaries) would have to wait until 2031 before the distributions would be qualified. And if his earned income is less than the $8600 contribution limit, he could be able to completely offset his earned income by deducting the contribution, which may be valuable to his tax situation.
And the add to RMDs would be minimal. By waiting until sometime in 2027 to make the 2026 contribution, there is no impact to the 2027 RMD. Assuming that a full $8600 contribution is made and grows at 10% a year, it wouldn’t be until 2033, when @blacktreechaser is 84 that the addition to the RMD would even be close to $1000, at $998.
Just one more bit to think about. Consider the size of what you expect to pass on to your heirs. They will have ten years to withdraw it all, and pay taxes on it. Compare your tax bracket now, and the taxes you would be deferring, to those of your heirs taking 10% as taxable income each year. If all it does is increase what they get later, rather than you needing to spend it, maybe you just give them the money now and encourage them to put it in their own IRA or ROTH.