I am immigrating to europe next year and would very much like to leave the US debt free. I have $47 thou in an IRA and $10 thou in debt. I will not be allowed to work for a year in my new residence country. IF I cash in the IRA how much is taken out up front and how much will I have to pay later?
Yes, I know this is a bad idea, but I feel strongly about being debt free and will have no income for a year.
2007-12-22 06:53:32 · 2 answers · asked by Jennifer T 2 in Business & Finance ➔ Personal Finance
you have 47K they will take 20% up front which will be 9400 which will leave you 37600 -- have a great time over the pond!!!
2007-12-26 02:14:07 · answer #1 · answered by Anonymous · 0⤊ 0⤋
They will withhold 20% at the time you take the money out--ostensibly 10% for the early withdrawal penalty and 10% towards taxes. The IRA money is added to your other income and taxed--and if you already have other income, your are most likely in the 15 or 25% tax bracket, not the 10% one.
If you wait until next year when you say you will have no other income, you may be in a lower tax bracket. As a US citizen, if you have no other income, the first $8750 (these are 2007 numbers, 2008 will be a little bit higher) won't be taxed at all, the next $7-8000 would be at 10%.
2007-12-22 15:01:25 · answer #2 · answered by Anonymous · 2⤊ 0⤋