I have been out of work on unpaid medical leave for 2 years now. I have used what savings I had and currently have over $300,000.00 in my IRA. I know I will pay a high tax, but can I withdraw money from this account or can I take a loan out from this account? If it is possible, which would be best to take the money out or to take a loan against it. Any and all help will be greatly appreciated.
2007-02-08 05:42:22 · 7 answers · asked by Bethy4 6 in Business & Finance ➔ Personal Finance
Loans are not allowed from IRA accounts, see attached IRS link. You can withdraw from your IRA, but if you are under age 591/2, you will be subject to early withdrawal penalties, in addition to taxes.
2007-02-08 06:20:18 · answer #1 · answered by oakhill 6 · 1⤊ 0⤋
You don't say how old you are or how much you need. Given that it is possible to withdraw funds from the IRA and only pay the income tax no penalty.
You can elect to take an annuity out each year. The amount would have to be based on your life expectancy. The older you are the greater the amount.
This election once made may not be changed until after you are older than 59 and one-half.
The only other way to take funds penalty free is to be disabled.
2007-02-08 15:59:32 · answer #2 · answered by waggy_33 6 · 0⤊ 0⤋
You can take a loan against a 401(k) but not against an IRA. There is a 10% fee if you are under 59 1/2 years old. But if you need the money, you should take it and plan accordingly.
2007-02-08 14:12:44 · answer #3 · answered by MR MONEY 3 · 0⤊ 0⤋
You can withdraw money from your IRA account, but you will be charged a fee. Most banks have a customer service representative that you have to talk to in order to withdraw from an IRA; it is not something that can be done at the teller window (usually).
2007-02-08 17:34:49 · answer #4 · answered by AnswerJunkie 1 · 0⤊ 0⤋
My advice, do not withdraw the money unless you ABSOLUTELY have to (i.e. life or death situation). It is in your IRA for a reason, for you to retire on. You start taking out money now, what is left when you retire? Buckle down, cut your expenses and get a second job if you have to, but leave that IRA as an absolute last resort.
2007-02-08 16:31:29 · answer #5 · answered by Mark 2 · 0⤊ 0⤋
You'd have to pay a hefty amount for what you withdraw. I came into a similar situation with a client this year. He withdrew about 300,000 from his IRA and sent them 68,000 for tax and it wasn't enough. He still owed money. I'd say if you need 10,000 to take out 20,000 and send about 7,000 of that to the IRS.
2007-02-08 13:48:21 · answer #6 · answered by castzpg 2 · 0⤊ 0⤋
I think that qualifies for a hardship withdrawal. You only pay taxes at your current tax rate --> no 10% penalty withdrawal.
Call 1-800-TAX-FORM to confirm
2007-02-08 14:30:22 · answer #7 · answered by DaMan 5 · 0⤊ 1⤋