IRA Rules

Archive for January, 2008

Question: How do I take my distribution out of IRA account with out paying penalty?

I am a sole-proprietor of a small business corporation (applied for S-corporation election for 2006). I have made a contribution to business retirement account for 2006. After making the contribution, I realized that S-corporations can not make contributions to SEP-IRA.

Now I have to take the distribution out of my IRA. Is there any way to do this with out getting fined by IRS for early withdrawal.

-thanks

Answer: If it shouldn’t be there to begin with, you will only get penalized if you don’t take it out.

Choose the Right Retirement Plan

Part 03 of 12 – Estate Planning vs. Asset Protection

Question: Questions regarding 401(k). 70 year old, still working?

Person was 70 on 12/25/07 and is still working full time. She has a 401(k) Profit Sharing plan where she works. Does she have to start taking out of it this year? 70 1/2 rule. Can she establish a Traditional IRA at her bank and roll it over to that, or would that make any difference? Any advice or details would be appreciated!

Answer: As long as you are still working, contributions can continue to that 401(k) and you don’t have to start withdrawals, but distributions must start on IRAs starting for the year during which you reach 70 1/2. If you then roll the money into an IRA, it’s no longer in a 401(k) with the company you are currently employed with, is it?

The penalty for not taking the Required Minimum Distribution is a whopping 50% of what you were supposed to have taken out.

Stocks, Mutual Funds & Retirement Investments : What Are the Rules of Short Stocking?