My father is a US citizen currently living abroad in Europe, he is 66 and is thinking of cashing out his Traditional IRA account to our bank account in the US. When he tried to get in touch with Vanguard, their customer service was automated and sent him a bunch of forms with no real answer. So his questions are:
1. How much of his IRA can he cash out at age 66 without penalty?
2. Will there be any taxes?
2007-12-05 15:55:38 · 5 answers · asked by Allee K 3 in Business & Finance ➔ Personal Finance
He can withdraw the entire thing now if he wants. He will be required to start taking out money annually once he reaches age 70 1/2 (as long as he still has money in an IRA).
There will be no penalty because he is over 59 1/2. However, since what he put into the Tradional IRA was not taxed when it was put in, it will be taxed when he takes it out as normal income. If he's taking out a substantial amount (over $350,00), that would put him in the 35% bracket. $100,00 would put him in the 28% bracket (and it could be higher if he has other income).
It might be easier to transfer the money into an IRA at your father's bank in the US (transfers aren't taxed), since it would be easier for him to just transfer the money into his savings or checking account as he needed it.
2007-12-05 16:46:39 · answer #1 · answered by shoredude2 7 · 0⤊ 0⤋
He can withdraw any or all of the funds with no penalty. As for the taxes he should consult whoever prepares his taxes as this is different for every person. It is based on the amount of income he currently has, his current tax bracket, and how much he withdraws so no one on this site will be able to give you an accurate answer. Vanguard should be able to withhold taxes for your father at his request but he would have to specify a percentage (such as 10%, 15%, or 20% of what he takes out) so that he wouldn't have to worry about it at tax time in April.
2007-12-05 23:38:47 · answer #2 · answered by Anonymous · 0⤊ 0⤋
I believe he can cash it all out, but he will pay current income taxes. A traditional IRA is tax deferred, meaning you only pay taxes at withdrawal. If he's in the 25% tax bracket, and has, say, $100,000 in the account, then he would pay around $25,000. Since he only needs to be 59.5 to withdraw funds from it, then he shouldn't have any penalties besides income taxes.
2007-12-05 16:30:41 · answer #3 · answered by Anonymous · 0⤊ 0⤋
We have some funds with Vanguard, and their customer service has always been very helpful. Maybe he got someone who wasn't knowledgeable or who didn't understand his question. Call them back. I'm afraid to answer your question, even though I think I know the answer, because I don't know all the specifics of your dad's situation. Just call Vanguard back.
2007-12-05 16:22:46 · answer #4 · answered by No Shortage 7 · 1⤊ 1⤋
trouble-free and straightforward there is not any well mannered thank you to invite for money. Etiquette dictates which you do no longer point out presents everywhere on an invite. on a similar time as presents are primary or classic at weddings, focused visitor are in no way obligated to furnish one. to cut back the prospect of having presents, do no longer check in. enable your bridal occasion and relatives understand which you wish economic presents. the only "well mannered" thank you to invite for money is thru observe of mouth.
2016-09-30 23:38:04 · answer #5 · answered by Anonymous · 0⤊ 0⤋