Early Withdrawal

Posts Tagged ‘ira’

Question: taxes: Decided against a withdrawal: Where do you record IRA money that you put back after a Early Withdrawal?

we took out $7k that we were going to spend for college, then decided against this and used other funds, and we put back the money the next week, before the deadline to put money back. HOWEVER, we did receive a 1099-R indicating the $7k early distribution – but nothing from the IRS indicating that we put the money back.

Answer: Use line “11A” which is for a distribution. Write the word “ROLLOVER” to the left of line 11A. Do not make any entries on 11B. Even though you put the funds back with the same custodian, it is still a distribution and a rollover provided you have met the terms of a qualified rollover as you have indicated.

See pagr 25 of the 1040A instructions – link below.

Question: I am 61 year old. can I transfer my IRA to roth IRA tax free?

I know there is no penalty if I start withdrawing after 59-1/2
and I have to pay tax on withdrawal of my traditional IRA.
But if I just transfer from traditional IRA to ROTH IRA is it
taxable?

Answer: You can convert all or part of your regular IRA to a Roth IRA. You will pay tax on the amount you convert, but no penalty. I recommend that you look at it each fall and convert part of the IRA based on your other taxable income. You don’t want your conversion to put you in too high of a tax bracket.

By the way, your adjusted gross income must be under $100,000 (excluding the conversion) in order to convert any of the regular into a Roth. That $100,000 limit goes away for 2010.

Jim Kirby, CPA/PFS, CFP, CFS

Self-Direction — Why do YOU Want “Checkbook Control” of YOUR Retirement Funds?

David Cameron at Zeitgeist ’07