401K lump sum distribution WASH Trad IRA contribution = no tax?

[Billy Au-Yeung]

I have a client who is 62 yrs old. He would like to request a 401K lum sum distribution from his employer for downpayment of an investment property sometimes in the year. Say the amount of 401K distribution is $40K and he has the money under his checking account until Dec. If he failed to buy the property, he will create a Trad IRA account and dump the $13000 in there ( annual limit for hushand and the wife) to reduce the taxable income before the year end. In such case, only $27K will be taxable as income. Am I correct?