I'm 67 - my wife is 62. I am self-employed and my wife is a housewife. We file jointly. I have money in a Keogh and we both have Regular IRA's For the past few years we have had a lot of deductions that allowed me to take some money out of my Keoghs without any tax consequences. We have not been contributing to our regular IRA's, although I have each year put money in the Keogh. This year I find there are some taxes to be paid over and above the Self-employment tax. So I found we could eliminate that with a small contribution to the wife's IRA. Now this started me thinking and brings me to my point and question. I am playing around with the notion of taking a distribution from my Keogh and offsetting the tax consequence of that distribution with a contribution to my wife's IRA. The pros are we pay no additional taxes. I pull tax-free distributions from my Keoghs. We contribute to my wife's IRA, which adds 5 years to that money before the RMD kicks in. My question is what are the cons?
Roughly it seems as if a $3000 distribution from the Keogh is offset by a $5000 contribution to the IRA.
Does this make any sense or am I missing something.
JW