Ira Withdrawal Tax Form
July 19th, 2008
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: let’s be sure we are talking apples and apples, not apples and oranges
a Roth IRA has no tax advantage at the start or end, you do have to keep it at least 5 yrs
now a regular IRA has a tax advantage when contributed, and is penalized if one withdraws prior to 59 1/2,
after that, the distribution is issued and a 1099 which will show how much is taxable at that time
did she report her IRA before or is she now being asked to report it? she always had an asset in her IRA account regardless of the amount
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