do we have to pay taxes on withdrawl of traditional IRA even after 591/2?
Is there any age limit we dont have to pay taxes on withdrawl?
2007-10-19 05:23:39 · 4 answers · asked by Anwar H 1 in Business & Finance ➔ Taxes ➔ Other - Taxes
Yes, you pay taxes on it, but not a penalty.
You did not pay any taxes on the money you contributed to it, so have to pay taxes when it comes out after retirement.
A Roth IRA, has no taxes after retirement.
You had to pay taxes on the money you put into it, so you don't have to pay taxes when it comes out after retirement.
2007-10-19 05:27:02 · answer #1 · answered by Feeling Mutual 7 · 0⤊ 0⤋
If the IRA was funded entirely with deductible contributions, then you pay income tax on every dollar you withdraw. If you funded the IRA partially or completely with nondeductible contributions, then the taxable portion is a ratio. Did you ever file a Form 8606 (Nondeductible IRAs)? If you put nondeductible money into the IRA you should file the 8606 each year you put the nondeductible money into it.
Just like everything else, there is no age limit on paying taxes on your income from the IRA.
You can withdraw from an IRA before 59 1/2 under certain circumstances or if the payments are calculated as Substantially Equal Periodic Payments. (See a tax advisor for an in-depth explanation).
2007-10-19 05:36:37 · answer #2 · answered by garyg7 7 · 0⤊ 0⤋
After 59 1/2 withdrawals are subject to income tax at your regular rates. Before then it is the same plus a 10% penalty. After 70 1/2 you must take your requrired minimum distribution which is an amount that would deplete the account by the end of your life expectancy.
2007-10-19 05:33:21 · answer #3 · answered by Anonymous · 0⤊ 0⤋
Yes, but not the 10% penalty, only regular income tax.
To be able to withdraw with no tax, you need a Roth IRA.
2007-10-19 08:23:09 · answer #4 · answered by StephenWeinstein 7 · 0⤊ 0⤋