My wife rolled her 401k into an IRA 10 years ago (we are no where near retirement) and the money has been sitting there untouched for years. If we take the money and close the IRA, what are the tax implications now (aprox. 35% of money?) and when we do our taxes for 2007? It is not alot of money and I contribute fully to my 401k
2007-10-09 06:47:28 · 4 answers · asked by John G 2 in Business & Finance ➔ Personal Finance
10% Penalty
Plus pay taxes on the full amount, which will put you in a higher tax bracket. So it could be 45% total.
Plus any state income tax.
Possibly she may not be able to contribute to a 401K or IRA for a year after that, check with the IRS.
2007-10-09 06:53:01 · answer #1 · answered by Feeling Mutual 7 · 0⤊ 0⤋
Assume you will pay about half to the government if you withdraw. Even though you are "no where near retirement", it's never too early to save for retirement. My aunt has been saying that she is "no where near retirement" for 30 years... Guess what? She's now 60 and wants to retire, but can't.
2007-10-09 09:57:38 · answer #2 · answered by Anonymous · 0⤊ 0⤋
Hopefully it's earning some interest or something.
Just keep it. When she gets to be 59-1/2, she can start withdrawing without the penalty. You may find that money coming in real handy when you get to retirement.
2007-10-09 07:04:40 · answer #3 · answered by bdancer222 7 · 0⤊ 0⤋
You will pay tax on the distribution at your highest marginal rate plus 10%.
2007-10-09 06:53:29 · answer #4 · answered by Anonymous · 0⤊ 0⤋