Posted on: 06th Jul, 2008 12:55pm
In personal finance, individual retirement account (IRA) plays a crucial role. It is a kind of retirement plan which offers tax advantages on your retirement savings. It is not at all wise to use the IRA funds to meet current expenses such as to make mortgage payments. You need to keep it in mind that earning in your IRA account is tax deferred. In other words, it implies that you are not required to pay taxes on your earning in the IRA unless you withdraw money from it.
If you withdraw money from this account before you reach the age of 59.5 years, then the Internal Revenue Service (IRS) considers it as pre-mature withdrawals. In that case you have to pay taxes as well as to pay penalty of 10% of the amount withdrawn.
If you withdraw money from this account before you reach the age of 59.5 years, then the Internal Revenue Service (IRS) considers it as pre-mature withdrawals. In that case you have to pay taxes as well as to pay penalty of 10% of the amount withdrawn.
Just lost my job and need to take money from my IRA to cover my mortgage. Is there a way of doing this without being penalized 10%?
Yes -- check with your fund! Normally, if monies redeemed/withdrawn are repaid to the fund within a certain time frame, your use of the money is not considered taxable at year-end. Otherwise, certainly you get taxed for redeeming your savings, even for use as mortgage payments.
