IRA Rules

Posts Tagged ‘ira distribution rules irs’

Question: IRA Minimum Distribution Rules?

If somebody withdraws their stock dividends in their IRA does that count toward the Minimum IRA Distribution rule?

Answer: Yes. All dividends, interest and invested funds are equal in the eyes if the IRS (they all are taxed as ordinary income when withdrawn).

Part 7: Inherited IRA and 5 year rule for distributions.

Question: Is an IRA distribution considered “investment income” as defined under Earned Income Tax Credit rules ?

To qualify for the earned income tax credit, your “investment income” must be below a certain amount. Is an IRA distribution considered to be part of this “investment income” ??
$ so fresh – you didn’t answer my specific question.
$so fresh – thanks for the new information.. you have now answered my question.
vb – thanks for your excellent and very helpful answer.

Answer: On 1040a, an IRA distribution is shown on line 11 *and* line in the agi on line 21.

In the 1040a instructions, the investment income worksheet specifically skips line 11.

However, the calculation of the EIC takes the agi into account, so a large amount of IRA money can lower the EIC (it would never raise it).

Retirement Planning : How Do IRA Distributions Work?

Question: 60 Day IRA Rollover?

I want to take distribution from my IRA Rollover account with the intention of redepositing the funds back in the same rollover account within 60 days. WIll this violate any IRS rules because my intention are not to rollover to another plan?

Answer: See IRS Publication 590. Nothing prohibits changing your mind and redepositing a rollover back into the same account it came from. Just don’t be late. 2 things to be aware of:

There is manditory 20% withholding from an eligible rollover if distribution is to you. When you put the money back in, you need to add that missing 20% back in from another source, or that withholding would be taxed/penalized. If you do everything on time, you could adjust your W-4 or 1040-ES to recover the withholding sooner that waiting until filing next year.

If you take a rollover from an account, you cannot take another rollover from that account for a year. And similarly if you put a rollover into an account, you cannot put another rollover into that account for a year. However, a direct trustee-to-trustee transfer to another qualified account is not subject to withholding or rollover frequency limits, if you later want to move any of it to a different trustee directly.

Protect Your IRA & 401k From the IRS!!!! * Workshop*