Archive for October, 2008
Early Withdrawal From Cd Penalty
October 26th, 2008
Question: How would IRS contact a person?
If a CD was cashed in (Early Withdrawal and penalty paid), would a person owe taxes on the money withdrawn? I don’t believe this money would be taxable, since it came from the sale of my home, but my ex said I was reported to the IRS, and may just be bluffing me. It’s been four years and it has been brought up to me several times as being reported. If indeed it was reported to IRS, how would they contact me? Would they send a certified letter, or would they come pounding on my door with handcuffs? Does anyone know first hand how you would be contacted? This is really making me crazy with worry. Like I said, my ex probably is just trying to get my goat and make me worry about something that won’t even happen, but keeps telling me that half of the money belonged to them because it was taken out in both names. In fact, I don’t even think the money was taxable, since I lost because of Early Withdrawal.
Answer: My tax accounting professor was a tax judge and and IRS agent for about 10 years. He had repeatedly said that they will usually send you a certified letter to your home address if they find some sort of irregularity. Generally it will contain a bill for whatever they think you owe. Also, the IRS is woefully understaffed and will only send an agent out if they think you owe a huge amount of money (like $10,000) and even still it may just fall through the cracks.
I am an accountant and a financial statement auditor can can tell you that all FDIC insured banks must report all of their customer’s transactions to the IRS annually so it is true that this transaction was reported to the IRS but just like everyone else’s transactions were.
I would worry more about the ex trying to sue me to get the money than the IRS trying to collect back taxes on it.
CD Early Withdrawals , Penalties and Maturity Options
Posted in 
Tags: 
Early Withdrawal From Ira 2010
October 20th, 2008
Question: Can I take money out of my CD account?(wamu->Chase)?
From wamu site
In general, you can withdraw the interest earnings on a CD at any time without an interest penalty. Withdrawals of principal, or the original amount deposited, are permitted only during a 7-day grace period that occurs at the end of the CD term. Withdrawals of principal during the term of the account are subject to an Early Withdrawal Penalty and may also cause the renewal interest rate/APY to vary during the grace period.
Retirement CDs held in an IRA permit some penalty free withdrawals for customers age 59 1/2 or older, however all distributions from an IRA are reportable to the Internal Revenue Service and may have tax implications. Contact your professional tax advisor before making a withdrawal from your IRA as IRS penalties may apply.
I opened a cd in 05 with a maturity date in 2010, need some extra cash and was wondering if chase was honoring wamu’s policies and what would i tell the bank to just withdraw the interest and not the principal?
Answer: Don’t you think you could get the most reliable answer from Chase by simply asking them this question in an email?
Should You Convert Your IRA to a Roth in 2010?
Early Withdrawal From Ira For Medical Expenses
October 10th, 2008
Question: Penalty on Early Withdrawal from IRA?
I left my job voluntarily and was unemployed for 12 months.I elected to participate in cobra, can I
use the cobra premiums I paid to lessen the 10% penalty. Or can I use the option to
include all medical expenses plus ins. premiums less 7.5% AGI.to lessen the 10% penalty. I am under age 59.
Answer: Medical expenses in excess of 7.5% of your AGI can be used to offset your penalty. You will do so using form 5329. Cobra payments can also be used to offset the penalty but only if the funds come from an IRA.
Health Savings Accounts