Discussion:Ira early distribution
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Discussion Forum Index --> Tax Questions --> Ira early distribution
| January 7, 2007 | |
| I was laid off in September '05. My employer had 401k program with Principle Financial Group. After lay off, I was contacted by Principle to rollover my 401k balance into a Traditional IRA. This was completed in 2005. I now need to take a early distribution of some funds from this IRA. I'm 58 and have been unemployed since separation from employer in '05.
I was not given option to keep funds in original 401k. If I read tax code correctly, I could have early distribution from 401k without penality. Because I was not given opportunity to keep funds in 401k and there were rollovered into IRA, is there any exception to the 10% penality tax for my circumstance? Thank you Wackena | |
Death&Taxes (talk|edits) said: | 7 January 2007 |
| I doubt you have any recourse except to yell about bad advice; however, depending on how much money you need, you might be able to set up withdrawals that would be part of substantially equal payments based on your life expectancy. If I recall correctly, this series of payments must last five years. | |
| January 7, 2007 | |
| Not unless you meet one of the exceptions listed on page 3 of the Form 5329 instructions. | |
| 7 January 2007 | |
| Read the fine print on the Principal Financial forms sent to you before you did anything. It probably told you ALL your options. | |
| 3 April 2007 | |
| Since March 2006, I've been paying for my unemployed personal health insurance. I plan to take a partial early distribution from my IRA in 2007. I've already file tax year 2006. When I file 2007 tax return, can I claim personal Health Insurance payments made in 2006 along with payments made in 2007 as exception to 10% early distribution 10% penality tax? | |
| 4 July 2007 | |
| The health insurance is claimed as a medical expense in the year paid if over 7.5% AGI. As to the early distribution penalty, if you received unemployment compensation for at least 12 weeks in 2007 the penalty is waived. Since you didn't take an IRA distribution in 2006 the early distribution problem doesn't exist in 2006. | |
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