Under 62, Unemployed, but on Military Pension (1099-R), I have submitted $3K through payment plan, but do not have any Earned Income. Should I leave the money and pay 6% penalty or have the money returned. (If money is returned am I subject to 10% penalty for early withdrawal, even though deposits were not authorized?)
2007-02-07 22:21:34 · 2 answers · asked by P-3 Hoser 2 in Business & Finance ➔ Personal Finance
You will need to withdraw the funds along with any income earned on it. You are not subject to the 10% early withdrawal penalty on this transaction. You will have to pay tax on the earnings in 2007.
You can not convert this to a traditional IRA for the same reason you can't have the ROTH IRA, you don't have any earned income.
Saying this however, if you are married and your spouse has earned income you can have the ROTH because you only need earned income as a couple.
2007-02-07 22:36:52 · answer #1 · answered by waggy_33 6 · 1⤊ 0⤋
You are not subject to the 10% penalty for early withdrawal, but you should take the over payment out. I would move it to a Traditional IRA and not a Roth.
2007-02-08 06:24:49 · answer #2 · answered by Christina J 2 · 0⤊ 2⤋