whether to buy a tax time IRA

Another thought occured to me. Can I roll over money from a dormant

403b (no longer contributing as I retired from full time work) to open an IRA within the same investment firm?

Did you have investment income in 2006? You'd be replacing 15% tax with possibly higher earned income tax via IRA. The benefits of a deferred income retirement accout accrue from decades of untaxed compound interest which is no longer an option for you.

snipped-for-privacy@sbcglobal.net wrote on [Fri, 6 Apr 2007 08:25:02 -0500]:

You probably can, but there would be no tax benefit to this

Anyone ever run into a situation where someone over the age of 59.5 contribs to an IRA right before tax day to lower income taxes and then withdraws the contrib right after tax day?

Is it legal? Would it be tax avoidance, or just tax deferral?

You mean depositing on 4/14/07 to claim on 06 return as deduction only to take as income in 07? Sounds more like a waste of one's effort, unless 07 was a lower bracket year, then I'd consider it. JOE

Yeah that's what I was asking.

I'm not saying I condone the practice or that it is highly beneficial, but in this case it may "fix" the OPers IMMEDIATE problem. Of course doing so just defers the problem, along with the taxes, for a year. Hopefully, the OPer is disciplined enough that he can increase his withholding over the next year, save more money, and better plan for tax time in general over the next year.

Having said that, the original post leads me to believe you must have the money to cover the $1500 tax liability because you are considering putting $4000 into an IRA. If that is the case, its not a cash flow matter but a tax avoidance matter in which case you will be back here next year trying to once again avoid the taxes.