Roth IRA, Traditional IRA, 401K » penalty http://www.iraroth.net IRA Questions and Answers Tue, 17 Jan 2012 00:09:43 +0000 en hourly 1 http://wordpress.org/?v=3.3.1 Should I close my Roth IRA and will I face a penalty? http://www.iraroth.net/2011/04/should-i-close-my-roth-ira-and-will-i-face-a-penalty/ http://www.iraroth.net/2011/04/should-i-close-my-roth-ira-and-will-i-face-a-penalty/#comments Tue, 26 Apr 2011 22:23:37 +0000 admin http://www.iraroth.net/2011/04/should-i-close-my-roth-ira-and-will-i-face-a-penalty/ Question by The Fervor King: Should I close my Roth IRA and will I face a penalty?
My wife’s parents opened a Roth IRA for her prior to us getting married. It has been opened around six months now. We are considering closing it to pay off her credit card and getting entirely debt free. Is there any sort of exception to the additional taxing on nonqualified disbursements that would apply to this situation? We have other investments in place, and this Roth IRA is really unnecessary. Any help would be greatly appreciated. Thanks.

Best answer:

Answer by Steve D
Sorry, but unless you can show hardship, there are no exemptions and you will end up paying the 10% penalty.

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]]> http://www.iraroth.net/2011/04/should-i-close-my-roth-ira-and-will-i-face-a-penalty/feed/ 3 Can you avoid 10% penalty on w/d from Traditional IRAs by doing this? http://www.iraroth.net/2010/05/can-you-avoid-10-penalty-on-wd-from-traditional-iras-by-doing-this/ http://www.iraroth.net/2010/05/can-you-avoid-10-penalty-on-wd-from-traditional-iras-by-doing-this/#comments Mon, 10 May 2010 23:11:19 +0000 admin http://www.iraroth.net/2010/05/can-you-avoid-10-penalty-on-wd-from-traditional-iras-by-doing-this/ if someone under age 59 1/2 wants to take money out of a Traditional IRA, they would have to pay a 10 % penalty and taxes. But what if they converted the Traditional IRA to a Roth IRA first? (and they can maybe convert only the amount they need). Then – as I understand Roth IRAs – there is no 10% penalty to withdraw from a Roth. Is this true?
Also, Can you w/d from a Roth anytime without incurring or do you have to wait 5 years after conversion?

]]> http://www.iraroth.net/2010/05/can-you-avoid-10-penalty-on-wd-from-traditional-iras-by-doing-this/feed/ 4 How to avoid penalty for transferring money from Roth to Traditional IRA? http://www.iraroth.net/2010/03/how-to-avoid-penalty-for-transferring-money-from-roth-to-traditional-ira/ http://www.iraroth.net/2010/03/how-to-avoid-penalty-for-transferring-money-from-roth-to-traditional-ira/#comments Sun, 14 Mar 2010 21:34:34 +0000 admin http://www.iraroth.net/2010/03/is-it-possible-to-transfer-money-from-a-roth-ira-to-a-traditional-ira-without-incurring-a-penalty/ I have Roth and Traditional IRA accounts and I exceeded my Roth limit, so I wanted to transfer some funds into my Traditional IRA account. Does anybody know if it is at all possible and if yes, what is the right way to do it?

]]> http://www.iraroth.net/2010/03/how-to-avoid-penalty-for-transferring-money-from-roth-to-traditional-ira/feed/ 2 Roth IRA early distributions‏ http://www.iraroth.net/2010/02/roth-ira-early-distributions%e2%80%8f/ http://www.iraroth.net/2010/02/roth-ira-early-distributions%e2%80%8f/#comments Thu, 04 Feb 2010 22:03:36 +0000 admin http://www.iraroth.net/?p=216 Hello. I have read IRA distribution rules over and over and understand the many examples clearly, but none applies to MY situation.

I have had a Roth IRA since 1999, when I converted to it. Since then I have made the maximum after tax contributions allowable (into an aggressive stock fund), and my balance is now around $90K. I am considering withdrawing all of my contributions because I fear being wiped out by the economy, and I cannot sit back and watch that happen. I cannot move the money to a “safe” harbor because all the safe funds (such as money market) at Vanguard are closed to new investors. What would the penalty be if I pull my contributions, if there is one? Must I wait five years from the year of each contribution to withdraw penalty free (in other words, can I withdraw only my contributions through 2004) or am I free from withdrawal restrictions on my entire after tax contributions? Please clarify.

]]> http://www.iraroth.net/2010/02/roth-ira-early-distributions%e2%80%8f/feed/ 1 Can I withdraw from my 401k without penalty to fund my college tuition? http://www.iraroth.net/2009/12/can-i-withdraw-from-my-401k-without-penalty-to-fund-my-college-tuition/ http://www.iraroth.net/2009/12/can-i-withdraw-from-my-401k-without-penalty-to-fund-my-college-tuition/#comments Wed, 23 Dec 2009 05:44:46 +0000 admin http://www.iraroth.net/2009/12/can-i-withdraw-from-my-401k-without-penalty-to-fund-my-college-tuition/ I am planning on working for a couple of years before going to school for a regular MBA. Can I contribute to my 401k plan now and withdraw it without penalty to fund my college tuition? Or is it better to take the tax hit now, rather than take the penalty later ?

]]> http://www.iraroth.net/2009/12/can-i-withdraw-from-my-401k-without-penalty-to-fund-my-college-tuition/feed/ 2 Can I cash out my traditional IRA early to buy a house without a penalty? http://www.iraroth.net/2009/12/can-i-cash-out-my-traditional-ira-early-to-buy-a-house-without-a-penalty/ http://www.iraroth.net/2009/12/can-i-cash-out-my-traditional-ira-early-to-buy-a-house-without-a-penalty/#comments Thu, 03 Dec 2009 03:17:39 +0000 admin http://www.iraroth.net/2009/12/can-i-cash-out-my-traditional-ira-early-to-buy-a-house-without-a-penalty/ I have $10,000 in a traditional IRA and I want to buy my first house this summer. The $10,000 would help me with pulling together enough money for a down payment. I would like to use it for this, but I don’t want to have to pay a penalty for an early withdrawal. I am 32 years old. Any advice?

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