| Name of Account To Withdraw IRA Without Interest? |
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wonderlunder
New Member
Cash: $ 1.85
Posts: 9
Joined: 02 Aug 2005
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| Name of Account To Withdraw IRA Without Interest? |
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Hi Money talkers,
I have a friend who wants to withdraw money from his
IRA without having to paying the taxes that incur after
a few months. I forget the name of it, but can't you
withdraw money from your IRA and flood it through a
certain type of account? I will also research how to
do this in some financial educational products I have,
but I wanted to ask the pros:)
Also, if this question has been answered, can someone
point me to the particular thread? I couldn't find one that
answered this question. This guy is investing it elsewhere
and it's just $1000 or so he is wanting to take out. I
remember somewhere hearing it was called a SEP-A or 501 account?
Does that ring any bells?
Many thanks,
Scott
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Wed Aug 02, 2006 8:04 pm |
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wonderlunder
New Member
Cash: $ 1.85
Posts: 9
Joined: 02 Aug 2005
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HI there,
He wants it for his own use. It seems that the only
way it can be taken out is through churning it through
a self directed IRA. I was doing some research and
that's the only thing I came up with. I'll ask him if
that's the method he was planning on using and the
interest rates that go with it.
Thanks coaster. Have a great day.
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Wed Aug 02, 2006 8:42 pm |
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wonderlunder
New Member
Cash: $ 1.85
Posts: 9
Joined: 02 Aug 2005
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okay, great, I got it and understand that he will be paying taxes
or interest, hence why I said " the method he was planning on
using and the interest rates that go with it", I just wanted to know
the options that are available.
Thanks and make it a great day!
Scott
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Wed Aug 02, 2006 11:17 pm |
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efflandt
Senior Member
Cash: $ 80.45
Posts: 401
Joined: 25 Apr 2005
Location: Elgin, IL USA
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Regardless of what type of IRA or retirement account he churns it through, if any of it is paid to him instead of trustee to trustee, it is reported to the IRS and there is manditory withholding if not a qualified distribution.
Even if he converts it to a Roth IRA (which would require paying tax on it now, but none later), he would be subject to 10% penalty if a converted amount was withdrawn within 5 years.
Self-directed just means that he can have the trustee invest it in any investment of his choice that is not prohibited for retirement accounts. It does NOT mean that he can have them pay it out for something for his own use.
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Wed Aug 02, 2006 11:26 pm |
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wonderlunder
New Member
Cash: $ 1.85
Posts: 9
Joined: 02 Aug 2005
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Thanks for the valued information guys. Coaster, I apologize
for not being clear. Efflandt, thanks for your post as well.
Scott
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Thu Aug 03, 2006 1:54 am |
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Bid-Palace
Full Member
Cash: $ 4.21
Posts: 74
Joined: 17 Mar 2004
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You are going to pay Taxes No Matter What. There is no way to avoid this. It just depends how long you are willing to wait as far as minimizing the taxes. If you take a cash distribution before you turn 59 1/2, you are going to pay an additional 10% penalty for that year. It's best to Roll it over to another Retirement Plan or IRA as long as you can.
At 70 1/2, the IRS forces you to take cash distributions out. You can't roll it over unless you have documenation providing validation you are currently taking minimum cash distribtutions. You are required to take taxes out at that time or the end that tax year. It just a Time Game and if you keep contributing as long as you can and make good decisions about your funds, you will have a "nice" chunk to live off when you retire..
I hope that helps.
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Fri Aug 04, 2006 1:39 am |
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wonderlunder
New Member
Cash: $ 1.85
Posts: 9
Joined: 02 Aug 2005
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HI guys,
Thanks for your replies. With your answers here and what he knew
already, he's able to have a peace of mind while securing the funds.
It's great to have communities like this online, especially that talk
about financial literacy and cashflow.
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Fri Aug 04, 2006 7:07 pm |
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