Early Withdrawal

Archive for October, 2007

Question: This is pertaining to IRA withdrawals. ?

I am presently receiving 72t early withdrawals from my IRA without penalty.
I was told by a friend a few years back that the earliest I can withdraw funds penalty free from my IRA is the calender year I will turn 59 1/2 which is 2010 (I will be 59 dec. 6,2009). Is this true ?

Answer: You must continue the 72t Withdrawals until the LATER of 5 years or until you turn 59.5. If you stop them or if you change them, ALL your withdrawals will be considered premature.

So, if you have been taking 72T just this year, you have to continue 2009, 2010, 2011, and then 2012 before you can change it.

If 2010 (the DAY after your birthday) is at least 5 years from when you started your 72T, you will be okay.

Helen, EA in PA

Retirement Savings – IRA Withdrawals, Rules and Penalties

Question: Ira Withdrawal Timetable for First Time Home Owner?

We’re in the process of closing on a house, and had planned to use money from our IRAs to put towards the down payment and closing costs, as allowed as a qualified earlier distribution. However, we’ve hit an odd snag with my wife’s IRA, and we may not be able to receive the IRA distribution before the date of closing. If the IRA funds do not clear into our account until after the date of closing, can we still consider those funds as being used for that purpose, or does that prevent us from being able to use the exception?

Answer: First of all, congrats!

The withdrawal does not have to specifically apply to down payment or closing cost.

You can take a distribution for up to 10K penalty free, your wife can do the same, just make sure your IRA custodian/trustee report the distribution as one that meets an exception to the Early Withdrawal Penalty.

$8000 Tax Credit for First Time Home Buyer Loan – Buy Foreclosures – RealEstateMarketingThisWeek.com

Question: Which will yield best results – partial contribution to a Roth IRA or full contribution to a traditional IRA?

I make more money than allowable for a full contribution to a Roth IRA, but I can still make a partial contribution. Over the length of my investment, will the difference in contribution make a traditional IRA favorable when compared to the tax breaks when withdrawing from a Roth IRA?

Answer: Yes. I think you want to go with a traditional IRA.

In my opinion, a Roth IRA is for someone with limited income, or all cash income. They’re pretty much not paying the taxes anyway.

Tax Law, Real Estate & Credit Tips : IRA Distribution Penalties