kentuck
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Sun Apr-09-06 04:34 PM
Original message |
The average IRA withdrawal last year was $8600.00... |
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I was just attempting to do my taxes with TurboTax and that was one factoid that they had on their program. Mine was just a bit higher than average. Did anyone else have to take any money out of their IRA last year? If the average was 8600.00 and the penalty is 25% plus federal and state tax, it seems that someone is making a good bit of change off those suckers that have to take money out of their IRA to live on. Yeah, they got a break when they invested, mostly from their employers, but they sure as hell get it back if you have to withdraw any of the money.
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Inland
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Sun Apr-09-06 04:37 PM
Response to Original message |
1. Does that include non taxable w/drawals after age 59 1/2? |
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If so, in part it's going to include older people living off savings, maybe retired.
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HereSince1628
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Sun Apr-09-06 05:13 PM
Response to Reply #1 |
4. No, that's people taking away from their retirement to survive |
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Thank goodness I'm now out of crisis and just into chronic trouble...two years ago I had to take out in order not to lose the farm.
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HereSince1628
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Sun Apr-09-06 06:52 PM
Response to Reply #4 |
15. And on second thought isn't it interesting that $6K is close to the |
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national average for credit card debt?
Maybe I'm reading into this, but it seems likely that folks are tapping their retirement to be able to get out from under 18%-25% annual percentage rates.
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BrklynLiberal
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Sun Apr-09-06 05:35 PM
Response to Reply #1 |
7. 59 1/2 is for ROTH IRAs only, not traditional IRAs |
mcscajun
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Sun Apr-09-06 05:41 PM
Response to Reply #7 |
11. Not So. With traditional IRAs, 59 1/2 is the earliest you can withdraw |
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Edited on Sun Apr-09-06 05:44 PM by mcscajun
without penalty, and you MUST begin taking withdrawals at 70 1/2.
The distinction of a Roth IRA is that with a Roth, contributions do not reduce taxable income, so there's no deduction. However, the Roth is a tax-free account; no taxes are paid on the interest, dividends, or gains -- ever.
Traditional IRAs provided tax deductions, so all withdrawals are taxable, regardless of when they are taken. Withdrawals before age 59 1/2 are subject to penalty in addition to tax.
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BrklynLiberal
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Sun Apr-09-06 05:50 PM
Response to Reply #11 |
13. You are right. Sorry. I misunderstood whatI read. |
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In a ROTH IRA, you pay the taxes on the income when you earn it, so you don't have to pay the taxes when you withdraw it.
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petersjo02
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Sun Apr-09-06 04:39 PM
Response to Original message |
2. I took out about half that, maybe a little more... |
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Edited on Sun Apr-09-06 04:41 PM by petersjo02
Had to take it out to help cover my health insurance premiums (not yet eligible for Medicare, and COBRA ran out) which are $568/month. I don't know how I would have managed that expense without my IRA money. That's in addition to my husband's health ins expense of just over $200/month.
Edited to add additional costs for hubbie's insurance.
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leftofthedial
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Sun Apr-09-06 04:52 PM
Response to Original message |
3. I completely wiped out the last of my life savings over the last year |
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Edited on Sun Apr-09-06 04:53 PM by leftofthedial
much more than the average.
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BrklynLiberal
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Sun Apr-09-06 05:37 PM
Response to Reply #3 |
8. So did I. I have been unemployed for 5 years and totally wiped out y IRA |
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Still not working. Am going to apply for food stamps, medicaid, and maybe even SSI.
My last job, in 2001, I was making $85,000 + benefits and perks. ;(
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lumberjack_jeff
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Sun Apr-09-06 05:28 PM
Response to Original message |
5. The early withdrawal penalty is supposed to be 10% n/t |
BrklynLiberal
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Sun Apr-09-06 05:38 PM
Response to Reply #5 |
9. Plus taxes for a Traditional IRA.. |
SeattleGirl
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Sun Apr-09-06 05:33 PM
Response to Original message |
6. I had to take some out of my account to stave off being taken |
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to court over a bill I had. It sucked the big one. Things still aren't going very well. I have hever had such a diffiult time financially.
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BrklynLiberal
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Sun Apr-09-06 05:39 PM
Response to Original message |
10. bankrate.com has a section on IRS rules for early IRA withdrawals |
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Edited on Sun Apr-09-06 05:41 PM by BrklynLiberal
You can use google to find the differences between ROTH and traditonal IRAs.
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BrklynLiberal
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Sun Apr-09-06 05:53 PM
Response to Reply #10 |
14. Comparison of ROTH IRA and Traditional IRA |
bemildred
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Sun Apr-09-06 05:45 PM
Response to Original message |
12. You can withdraw from 401k without penalty at 55 1/2. |
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From IRAs at 59 1/2
There are some special issues with the 401ks, but with the IRAs, once you 59 1/2 it's your money, you just pay ordinary income tax on it.
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Catshrink
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Sun Apr-09-06 06:56 PM
Response to Original message |
16. I had to 3 years ago when I did my student teaching... |
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had no other means of income. I'm glad I had it to draw on -- but I think I only withdrew about $5000. I tapped it 7 years ago for the down payment on my house -- the down payment was made up of 401(k) and the sale of Beanie Babies. I was amazed that someone paid $400 for a stupid bear I'd paid $5 for. Whatever -- the BBs paid for the house.
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