Early distribution from an IRA

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Subject Author Date Early distribution from an IRA sbernelli 04-20-2008  Re: Early distribution from an IRA joetaxpayer 04-20-2008  Re: Early distribution from an IRA Phil Marti 04-20-2008  Re: Early distribution from an IRA removeps-groups@yahoo.com 04-20-2008  Re: Early distribution from an IRA dpb 04-20-2008  Re: Early distribution from an IRA removeps-groups@yahoo.com 04-22-2008  Re: Early distribution from an IRA dpb 04-23-2008  Re: Early distribution from an IRA Seth 04-23-2008  Re: Early distribution from an IRA dpb 04-23-2008  Re: Early distribution from an IRA Phil Marti 04-23-2008  Re: Early distribution from an IRA joetaxpayer 04-24-2008  Re: Early distribution from an IRA Phil Marti 04-24-2008  Re: Early distribution from an IRA joetaxpayer 04-24-2008  Re: Early distribution from an IRA sbernelli 04-20-2008  Re: Early distribution from an IRA joetaxpayer 04-20-2008  Re: Early distribution from an IRA Elle 04-20-2008
Posted by sbernelli on April 20, 2008, 10:23 am Please log in for more thread options It was my understanding that an early distribution from an IRA was not only taxable as income but also, with a few exceptions, subject to an additional 10% tax. Now an acquaintance tells me she read somewhere that an early distribution precipitated by job loss would not require an additional 10% tax. I cannot confirm this in any of the tax books I researched. Is this acquaintance correct? Thanks. Sara -- << ------------------------------------------------------- >> << The foregoing was not intended or written to be used, >> << nor can it used, for the purpose of avoiding penalties >> << that may be imposed upon the taxpayer. >> << >> << The Charter and the Guidelines for submitting posts >> << to this newsgroup as well as our anti-spamming policy >> << are at www.asktax.org. >> << Copyright (2007) - All rights reserved. >> << ------------------------------------------------------- >> Posted by joetaxpayer on April 20, 2008, 10:29 am Please log in for more thread options sbernelli@hotmail.com wrote: > It was my understanding that an early distribution from an IRA was not > only taxable as income but also, with a few exceptions, subject to an > additional 10% tax. Now an acquaintance tells me she read somewhere > that an early distribution precipitated by job loss would not require > an additional 10% tax. I cannot confirm this in any of the tax books I > researched. Is this acquaintance correct? Thanks. > > Sara There are a number of exceptions, you are correct there. She may have read that job loss due to permanent disability is one such exception, and forgot to mention the disability part to you. There was a Katrina (as in the hurricane) exception as well, but that has come and gone. Joe www.blog.joetaxpayer.com -- << ------------------------------------------------------- >> << The foregoing was not intended or written to be used, >> << nor can it used, for the purpose of avoiding penalties >> << that may be imposed upon the taxpayer. >> << >> << The Charter and the Guidelines for submitting posts >> << to this newsgroup as well as our anti-spamming policy >> << are at www.asktax.org. >> << Copyright (2007) - All rights reserved. >> << ------------------------------------------------------- >> Posted by Phil Marti on April 20, 2008, 10:58 am Please log in for more thread options > It was my understanding that an early distribution from an IRA was not > only taxable as income but also, with a few exceptions, subject to an > additional 10% tax. Now an acquaintance tells me she read somewhere > that an early distribution precipitated by job loss would not require > an additional 10% tax. She's wrong if she thinks that's all it takes. For a complete description of the penalty exceptions see the discussion beginning on page 53 of IRS Publication 590. Don't forget to keep reading through all the "ifs, ands and buts." -- Phil Marti Clarksburg, MD -- << ------------------------------------------------------- >> << The foregoing was not intended or written to be used, >> << nor can it used, for the purpose of avoiding penalties >> << that may be imposed upon the taxpayer. >> << >> << The Charter and the Guidelines for submitting posts >> << to this newsgroup as well as our anti-spamming policy >> << are at www.asktax.org. >> << Copyright (2007) - All rights reserved. >> << ------------------------------------------------------- >> Posted by removeps-groups@yahoo.com on April 20, 2008, 1:52 pm Please log in for more thread options On Apr 20, 7:23 am, sberne...@hotmail.com wrote: > It was my understanding that an early distribution from an IRA was not > only taxable as income but also, with a few exceptions, subject to an > additional 10% tax. Now an acquaintance tells me she read somewhere > that an early distribution precipitated by job loss would not require > an additional 10% tax. I cannot confirm this in any of the tax books I > researched. Is this acquaintance correct? Thanks. See http://www.investopedia.com/articles/retirement/02/111202.asp To pay for medical Insurance might apply, but only after you receive unemployment for 12 weeks. To pay for un-reimbursed medical expense over 7.5% of AGI might apply, but that's even if you're employed. Finally, substantially equal periodic payments. You have to do it for 5 years though, so it eats up your retirement savings. Follow the link in the above webpage titled " Rules Regarding Substantially Equal Periodic Payment". The example there shows that on a 500k balance and age of 45, the annual payment would roughly be 12500 or 25000 depending on the method you choose to use. Good luck. ========================================= MODERATOR'S COMMENT: The SEPP requires five years AND until you reach age 59.5 -- << ------------------------------------------------------- >> << The foregoing was not intended or written to be used, >> << nor can it used, for the purpose of avoiding penalties >> << that may be imposed upon the taxpayer. >> << >> << The Charter and the Guidelines for submitting posts >> << to this newsgroup as well as our anti-spamming policy >> << are at www.asktax.org. >> << Copyright (2007) - All rights reserved. >> << ------------------------------------------------------- >> Posted by dpb on April 20, 2008, 3:07 pm Please log in for more thread options removeps-groups@yahoo.com wrote: > On Apr 20, 7:23 am, sberne...@hotmail.com wrote: ... > Finally, substantially equal periodic payments. You have to do it for > 5 years though, so it eats up your retirement savings. ... ... > ========================================= MODERATOR'S COMMENT: > The SEPP requires five years AND until you reach age 59.5 The "trick" is that one can distribute a sizable IRA into multiple accounts so the SEPP amount can be calculated over an initial value of a chosen size to limit the collateral damage, so to speak. -- -- << ------------------------------------------------------- >> << The foregoing was not intended or written to be used, >> << nor can it used, for the purpose of avoiding penalties >> << that may be imposed upon the taxpayer. >> << >> << The Charter and the Guidelines for submitting posts >> << to this newsgroup as well as our anti-spamming policy >> << are at www.asktax.org. >> << Copyright (2007) - All rights reserved. >> << ------------------------------------------------------- >> Similar Threads Posted Early Distribution -- Divorce & Disabled February 4, 2008, 4:29 pm Early IRA and Roth IRS distribution - Taxable? 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