Early Withdrawal

Archive for September, 2006

Question: Ohio Food Stamp elegibility?

I was laid off in October and am receiving $302 a week on my unemployment. My husband was laid off over 3 years ago from a union painting job and his unemployment ran out two years ago, so he brings in no money at all. We own our own home, mortgage payment about $445 plus the regular utility bills. No credit card or car debt (thank God). Using a gov’t calculator tool it seems we may qualify for food stamps but there’s just one question. I have a SEP retirement fund set up at the place I was laid off from…….no contributions from my company. I have invested about $21,000 over the course of time, but with the bad economy, the account is worth less than $13,000 now. Also there is the penalty for Early Withdrawal (I’m 57) which would be a double hit. The food stamp guidelines say that a person of my age can have no more than $2000 in saving. Does that include my retirement plan?

Answer: I can’t help with food stamp eligibility. I can recommend looking at two PRIVATE programs that help you save on food. The names are Angel Food Ministries and Great Food For All.

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IRA Traditonal, Money Concepts for Life

Question: Can your repay a withdrawal from a rollover IRA to avoid penalties?

I need to take some cash from my rollover IRA and was wonder what the rules are regarding repayment. If I take out $5000 but the put $5000 back in say the next 12 months, can I avoid penalties or at least avoid the income tax?
The distribution would be to cover a shortfall caused by my extended maternity leave (which was last summer) and recurring illness. The illness qualifies as a disability according to SSA but I am not willing to give up and stay home yet, so I don’t think I could take a disability distribution.

Answer: You can withdraw funds from your IRA for up to 60 days tax-free. It’s really important to remember that you have to repay the funds within 60 days to avoid paying income tax and the 10-percent early-withdrawal penalty.

If you have more than one IRA, you can only make a withdrawal once within a one-year period from each IRA.

There are exceptions, however, if you’re withdrawing for a first home purchase, certain medical expenses, college expenses, etc. These are very limited exceptions, so I’d need to know more info before giving an accurate answer on these exceptions.

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