Can I withdraw from an IRA this year and add it back last year?

[Guest rkal66]

My wife and I both have IRAs and we are over 65 and less than 70.5 years old. We both earned over $5,000 each in 2007 but most of our income was from IRA withdrawals.

Can we withdraw $10,000 from our IRAs now (2008) and use it to make a 2007 contribution ($5,000 each) to our IRAs before April 15th?

The benefit is that we are in a higher bracket this year than we might be in next year so we delay somewhat taxes. Also, I did not pay enough in estimated taxes and this will eliminate a penalty.

[JanetM]

Yes, but only if you mean you both have earned income for working. Withdrawal from retirement plan, interest, dividends and rents don't count as income.