Early Withdrawal

Question: Early withdrawal from IRA for first home, BUT for finishing the home?

This is my first home, got mortgage approx. 6mos. to 1 year ago (I should know that!), and I still have things that need to be finished. I understand you can withdrawal early from your IRA for a first home – $10,000, but does that have to go right to the mortgage company or can I finish the house with the money? It would all be spent on the house, just not directly on the financing. Its just taking me longer than I thought to finish this darn thing – the kitchen, appliances, etc.!
And think of this Mr. IRS man, all that money would help the economy! Home depot, sears, lowes… lol

Answer: IRS has no way to track exactly where the money is spent. BUT you have to buy a home in the year you take the withdrawal. Bottom line, if you bought a home in 07 you can’t take a tax and penalty free distribution in 08. If your IRA is of the Roth style, then you can take back your principal without tax or penalty.

Question: Was any IRA withdrawal relief passed this year ?

The candidates talked of allowing limited IRA withdrawals to be taxed at 10 %. Did that or anything like it actually become law ?

Answer: No.

As of now, there are no changes to previous law.

Rapid City Tax Day Tea Party – Ira Taken Alive

Question: How do you request the IRS to forgive the 10% penalty imposed upon IRA withdrawals?

Due to the loss of employment I’ve had to withdraw funds from my IRA. I know I will have to pay income taxes on the amount I received. However, I would like to request the 10% early withdrawal penalty be forgiven due to financial hardship. Is there a form or letter template I could utilize when submitting my tax paperwork to the IRS?

Answer: You don’t. They do not have the authority to do so.

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