Archive for April, 2007
Ira Withdrawal Form
April 12th, 2007
Question: Question about government benefit?
One of my friend has low income from her regular job salary, but she still tried to put away some money on her roth IRA account. As you know, the earning in roth IRA is tax free. But over the years, the penny stock she bought has grown a lot, and she sold it recently, and make a lot of capital gain. Now she is not poor, since she has some asset(cash) in her roth IRA account, but at the meanwhile she is still poor since she can not take the capital gain out of her IRA account till she turns to 59 1/2 years old, otherwise, she need to pay penalty for Early Withdrawal.
So is she still qualified for government benefits? Like medicaid, food stamp.
Before she was qualified because she has the low-income job.
For example, on the medicaid renewal form, does she need to report her “asset” in her IRA account? If reported, that may causes her to lose her qualification for medicaid. But she needs the medicaid since she cannot afford the medical bill(low income job).
Thank you very much!
Answer: She has to report this amount, Usually if it is an amount she can’t access and is not ‘liquid’ it will not hurt her chances of qualifying. That being said if she doesn’t turn it in to them and they were to find out that is fraud. She could have to repay whatever benefits she received back and/or pay a fine/serve jail time. I know in Indiana where I am they are very serious about these things and they will check up on it. Its not worth the risk.
Gold is an excellent form of protection for your IRA and 401K
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Ira Withdrawal For Down Payment
April 4th, 2007
Question: IRA Rollover question?
I have a pretax 403b annuity that I want to rollover into an IRA, because I can use the IRA for first time home buyer down payment up to $10000 tax free. My question is how long does the IRA have to be in effect before I could make a withdrawal; is it one year one month etc. This is an annuity from a previous employer that has been sitting in this account for the past 10 years. To my understanding only IRA’s qualify for the home buying.
Thank you in advance for your help!
Answer: You are partially correct.
You can take $10,000 out of an IRA for a first time home purchase and it will be exempt from the 10% PENALTY but not the taxes. You would still have to pay taxes (10%-35% depending upon your other income), on this withdrawal. A $10,000 withdrawal will probably only net you $7000-$8000 after the federal and applicable state taxes are paid.
Assuming that you can get the money out of the 403b, there is no time limit on how long the money must be in the IRA.