IRA Rules

Posts Tagged ‘mda’

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: U.S. Retirement IRA Tax Question?

I am under 59 1/2 and have been taking IRA distributions for the last 15 years. These distributions were set up as substantially equal payments over my Life Expectancy (an annuity), and so were an exception to the usual rule prohibiting distributions before age 59 1/2.

The terms of the annuity exception to the 59 1/2 rule make it clear that there could be a recapture tax if the distribution method is changed. But there is a paragraph of Pub 590 that says I can make a one time switch to the required minimum distribution method at any time without incurring the additional tax.

My question:

Does this one time switch to the minimum distribution method exception allow me to discontinue my annuity distributions until I reach age 70 1/2 without incurring any additional taxes or penalties?

Answer: it would seem to me that at age 70 1/2 when the RMD comes into play since you already have a distribution set up that probably was at least the RMD, there would be no change

Investing & Money Management : What Is an RMD?

Invest and Earn 8%-15% on your Money