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Educational
IRA?
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What about
FDIC Insurance?
How much do you have your home insured for? Car? Office Furniture?
Insurance companies are MORE SOLVENT than banks. They have their OWN plans
administered by the State of California to protect against any loss of
principle. Agents are prohibited from using it in sales presentations. Here's
the link to the California Insurance Code on it.
§1067-1067.18Did anyone lose principle when
Executive Life went under?
I could always get at least 3%
There was a time when people told me they could always get 7 - 12% at the
bank. The bank DOES NOT GUARANTEE ANY interest rate!!! We are currently paying
x% . What is your bank paying now? If you get a CD how much do they charge if
you want your money back early? There is NO penalty if you just stop depositing.
Will the bank automatically send you your money monthly or annually? Will the
bank send you a bill to remind you to send in the money so it can grow? Does
your bank promptly answer your questions by email, from someone you're
dealing with personally?
If you take the money out on a "payment" plan and not lump some - there is NO
Penalty Doesn't sound like 5.25% to me? What's their penalty for early
withdrawal? We
have NONE if you take the money out over a 3 year period. (I'll double check the
minimum time) What's the penalty from the Federal Government for early
withdrawal
on an IRA? The Jackson Annuity is the SAME annuity whether you do it as an IRA,
Roth IRA or without the current income tax deduction
IRA CDs bankrate.com
This web site is continually evolving, we get weekly reports on every request
in our search engine. Many of you have asked about EARLY WITHDRAWAL.
I've cut and pasted several of the questions from the
IRS Page
on this issue. Basically, it's a 10% penalty from the Federal
Government. You will probably have a penalty from the Bank
Certificate of Deposit or the Insurance Company
Annuity.
You would have to check with your Bank or in the Annuity Policy it will have a
page - called Surrender Charges and it will tell you. When you get your
statement, it should show a figure for Accumulated Value and Cash or Surrender
Value.
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What are the tax options for lump-sum distributions
from retirement plans?
Special tax computations are allowed for qualifying
recipients of certain lump-sum distributions from retirement
plans. Refer to
Tax Topic 412 which discusses Lump-Sum Distributions, or
Publication
575 (PDF), Pension and Annuity Income.
References:
Allianz Index
Annuity Brochure
If we cash in a pension plan while in our thirties, when do we pay the
taxes and penalties?
Because our tax system is a pay-as-you-go system, you may need to make an
estimated tax payment by the due date for the quarter in which you received
the distribution. When calculating your tax liability to determine whether you
need to make an estimated tax payment, your total tax for the year should
include the amount of the 10 percent additional tax on early distributions
from qualified retirement plans unless any exception applies.
You would calculate the tax on Form 1040ES (PDF),
Estimated Tax for Individuals, and any 10 percent
additional tax on early distributions from qualified retirement plans on
Form 5329 (PDF),
Additional Taxes on Qualified Plans (including IRA's) and other tax-favored
accounts.
References:
- Form 1040ES
(PDF), Estimated Tax for Individuals
- Form 5329 (PDF),
Additional Taxes Attributable on Qualified Plans (Including
IRA's) and other tax-favored accounts
- Publication 505
(PDF), Tax Withholding and Estimated Tax
- Tax
Topic 451, Individual retirement arrangements (IRAs)
- Tax
Topic 558, Tax on early distributions from retirement
plans
Since money was withheld from my 401(k) distribution, do I have to
include that money as income and do I pay the 10% early withdrawal fee as
well?
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Yes, you need to include in income the total amount of your 401(k)
distribution. In addition, if you took the distribution before reaching age 59
1/2, you will need to pay a 10 percent additional tax on early distributions
from qualified retirement plans unless you meet the exceptions in
Publication 590 (PDF) ,
Individual Retirement Arrangements (IRAs).
References:
Can I withdraw funds penalty free from my 401(k) plan to purchase my
first home?
If you are under the age of 59 1/2, you cannot withdraw funds from your
401(k) plan to purchase your first home without being subject to a 10 percent
additional tax on early distributions from qualified retirement plans.
However, depending on the rules for your 401(k), you may be able to borrow
money from your 401(k) to purchase your first home. Your plan administrator
should have written information about your particular plan that explains when
you can borrow funds from your 401(k) as well as other plan rules.
References:
I changed jobs and my old employer sent me a check for my 401(k) money
withholding 20% for Federal Income Tax. I rolled over the distribution to my
401(k) plan at my current employer within 60 days. Since money was withheld
from the 401(k) distribution, do I have to include that money as income?
If the amount rolled over was the net amount, that is, the amount of the
distribution less the tax withheld, then the 20% withholding amount not rolled
over is included in gross income and subject to a 10 percent additional tax on
early distributions from qualified retirement plans. Use
Form 5329 (PDF),
Additional Taxes on Other Qualified Plans (including IRA's),
and other tax-favored accounts, to report the penalty.
If the amount rolled over was the gross amount, that is, you added an
amount equal to the withholding to the amount that was rolled over, you would
not add any of that amount to gross income this year or owe a 10 percent
additional tax on early distributions from qualified retirement plans.
References:
- Publication 590
(PDF), Individual Retirement Arrangements (IRAs)
- Form 5329 (PDF),
Additional Taxes on Other Qualified Plan (including IRA's),
and other tax-favored accounts
- Instructions for Form
5329, Additional Taxes on Other Qualified Plan (including
IRA's), and other tax-favored accounts
- Tax
Topic 558, Tax on early distributions from retirement
plans
- Tax
Topic 412, Lump-sum distributions
If I retire or am laid off before I am 59 1/2, can I withdraw the
funds accumulated in a qualified employee profit sharing plan, 401(k), without
having to pay a 10% penalty?
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In most cases, if you withdraw funds from your 401(k) before you are 59
1/2, you must pay the 10 percent additional tax on early distributions from
qualified retirement plans on any amounts that are not rolled into an IRA.
However, there are some exceptions listed in
Publication 560 (PDF),
Retirement Plans for Small Business and
Publication 575 (PDF),
Pension and Annuity Income.
References:
Can the 10% penalty for an early withdrawal from a retirement plan be
deducted in the Adjusted Gross Income section of Form 1040 as a penalty on
early withdrawal of savings?
No, the 10 percent additional tax on early distributions from qualified
retirement plans you pay for a premature withdrawal does not qualify as a
penalty for withdrawal of a savings account.
References:
After I was terminated by my employer I received a lump sum
distribution from the Pension Plan. The entire distribution was identified on
Form 1099-R as taxable and 20% tax was withheld. I've been told I need to pay
an additional 10% tax. Why am I being taxed twice if 100% of the distribution
was taxable to begin with?
If you take a distribution from certain pension plans before you have
reached 55 years of age, you may be subject to an additional 10 percent tax on
early distribution. This 10 percent is in addition to the income tax you pay
on the distribution. The total income tax you owe on your individual income
tax return is reduced by any withholding or estimated tax payments, including
the 20% withholding identified on your Form 1099-R.
References:
I withdrew money from my 401(k) plan. What tax forms will I need to
fill out?
You will need to file a Form 1040 and show the amount of distribution from
your 401(k) plan on lines 16a and/or 16b. If you took a distribution prior to
reaching age 59 1/2, you will need to pay a 10 percent additional tax on early
distributions from qualified retirement plans that is reported on line 58 of
Form 1040 unless you qualify for one of the exceptions discussed in
Publication
575 (PDF), Pension and Annuity Income. Depending upon
how the distribution on your Form 1099-R is coded (refer to box 7 of the
form), you may also need to complete
Form 5329 (PDF),
Additional
Taxes on Other Qualified Plan (including IRA's), and other tax-favored
accounts. Refer to the
Instructions for Form 5329 , Additional Taxes on Other
Qualified Plan (including IRA's), and other tax-favored accounts to
determine if you need to file Form 5329.
References:
IRS
Publication on Retirement Options for Small Business # 3998
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