IRA Rules

Posts Tagged ‘ira rollover’

Question: How do calculate 10% excise tax on IRA withdrawl?

I think i have failed to pay the early withdrawl 10% tax on my 72T for some past years.

Say I had $100,000. in my IRA and was supposed to take 4%
a year over 12 months until age 591/2.

I did take some additional withdrawls. My question is this.
Is the 10% tax on the additional withdrawls or 10% of $100,000? Sorry if I am confusing you. there are so many rules confusing me.
I have already paid the state tax and regular income tax on the withdrawls. I just faild on the 10%
Honestly,, I became aware of the problem when i got sober. I was lying to myself and the IRS.
The IRS did not call it to my attention.
My CPA mentioned it.
I a bit freaked-out. I need to be honest to stay sober. I will owe over 100K

Answer: From my understanding and experience of this issue the IRS may attempt to assess 10% on all of the entire withdrawal since the additional withdrawal has violated the 72(t) exception. There is some question if they (the IRS) have the ability to catch the problem absent any other reason for them to have looked at the return. Therefore the best approach to this question may come from an understanding of how the problem came to your attention.

For the returns to have been filed correctly in the first place the preparer would have included a IRS Form 5329 and excluded the 72(t) portion on line 2 of that form and assess a 10% penalty on the remainder. If you wish to be correct you should file an amendment (1040X) to include the corrected IRS form 5329. But again the means by which you became aware of this oversight may dictate another answer.

Roth IRA: The New Rules (Part 2 of 2)

Usually when you are working for a company, you have a 401k retirement account, a SIMPLE IRA individual retirement account, or any other type of retirement plan. When you leave your job, your ex-employer will either:

1. let you keep your retirement plan where it is for a certain period of time
2. cut you a check for the amount in your retirement account
3. provide a way for you to rollover the employer retirement plan into your own IRA individual retirement account

IRA rollover rules of total IRA rollover contributions

Similar to the traditional IRA rules and Roth IRA rules, Rollover IRA Rules also specify contributions to rollover IRA. Excess contributions to a Rollover IRA or any other types of individual retirement accounts will be penalized under all IRA rules, including traditional Ira Rules and Roth IRA rules.

Ira Rules on tax deductible contribution for IRA Rollover

Ira Rules state that rollover contributions are not tax deductible. However, amounts distributed from a qualified retirement plan that are properly rolled over to a Traditional IRA individual retirement account are excluded from taxable income until withdrawn from the IRA.

Ira Rules for deductible contribution for Non-Active Plan Participant Spouse

As mentioned earlier, Ira Rules state that rollover contributions are not tax deductible. However, amounts distributed from a qualified retirement plan that are properly rolled over to a Traditional IRA are excluded from income until withdrawn from the IRA. Once the retirement funds are rolled over to an individual retirement account, tax deduction is considered under the Ira Rules of the type of individual retirement account opened. For Example, if you rollover retirement funds into a Roth IRA account, Roth IRA rules apply.

Ira Rules for non-deductible Contributions

Not applicable for rollover IRA accounts.

Ira Rules on IRA Rollover Contribution Deadline

The Ira Rules pertaining rollover contribution deadline is probably a single most important rule you need to learn and comply. Many people often ask how long they have to rollover their retirement account from their previous employer. The answer is, under the current Ira Rules, you have 60 days after receipt of retirement distribution, no extensions.

Rollover IRA Rules of 60 days