Early Withdrawal

Archive for September, 2009

Question: In the future, could the government simply cancel the tax-free withdrawal feature of Roth IRA’s and 401(k)’s?

As is well known, withdrawals from Roth IRA’s and Roth 401(k)’s are tax-free when the requirements for tax-free withdrawals are met. But does the government have the authority to actually cancel that entire feature of these accounts, even accounts that have been open and funded for years?

Answer: You always pay tax on 401k no matter what when you withdraw.

About the Roth IRA. They may, if that happen, they lost the appeal of tax free account because the contribution is after tax money meaning they could open the regular saving account and done with it.
I doubt it will happen

Why PGI SelfDirected vs. All the Other Guys

Question: Early Roth Ira Withdrawal after 5 years Transfer?

In 1998 I transferred a Traditional IRA (approx. $15,000) into a Roth IRA and paid the appropriate taxes. Through bad investments the value of the Roth in 2007 was $12,000. I withdrew $11,000 to pay some debt. I know I don’t owe tax on Capital Gain but do I still need to pay the 10% penalty? Does the “5 year Rule” have any effect on the 10% penalty?

Answer: There are two conditions that must be met to avoid a penalty when withdrawing money from a Roth. One, you need to have had the account for at least 5 years, and you must be at least 59 1/2 when you made the distribution. If one of these two conditions are not met, you will pay a 10% penalty on the amount of the distribution as an “early withdrawl penalty”. You will also pay taxes on the earnings that are imposed in the event of a non-qualified distribution, which is basically an ordinary income tax (since your account didn’t earn anything you don’t have to worry about that).

If you are over 59 1/2 you don’t have to worry about it and shouldn’t have to pay any taxes or penalties.

Free Derry,The IRA guarding Bogside.Street Battle, Rosemount

Question: Another question SIMPLE IRA question. Which of the following statements is/ are correct?

which of the following is/ are correct regarding SIMPLE plans?
1.A SIMPLE plan does not require annual testing.
2.A SIMPLE IRA must follow a 3 yr cliff vesting schedule if the plan is top-heavy
3.A 25% Early Withdrawal Penalty may apply to distributions taken within the first two years of participation in a SIMPLE plan.
4.The maximum elective deferral contribution to a SIMPLE 401K plan is $15.5k for 07 and $20.5K for o7 for an employee who has attained the age of 50.
a.3 only
b.1 and 3 only
c.1,2, and 3
d.2,3,and 4

Answer: visit this link for a trusted answer

http://www.missouribusiness.net/irs/sections/section11/simplefaqs.htm#15

Ira losco @ younger age