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Message
IRA distribution question.
Posted on 4/17/13 at 12:32 pm
Posted on 4/17/13 at 12:32 pm
Say you take out loans to get through college and you begin to pay them. Can you pay them off with an IRA?
2
Posted on 4/17/13 at 12:34 pm to reb13
sure can. you will pay tax and penalties if it is a traditional ira or gains from a roth ira though
Posted on 4/17/13 at 12:35 pm to aaronb023
Oh ok, so it isn't a qualified distribution?
Posted on 4/17/13 at 1:05 pm to krehn11
Ok, so I have one year of grad school left. That seems to be eligible correct? (Tuition, room and board etc)
This post was edited on 4/17/13 at 1:06 pm
Posted on 4/17/13 at 1:38 pm to reb13
Question, sorry to get off topic of OP.
If I contribute $15k over 3 years to a traditional IRA and I withdraw $15k, it will only be taxed at my regular tax % correct? If I withdrew $17k, the $2k would be taxed at an additional 10%. Is that correct? I've never fully understood what the additional 10% is on.
If I contribute $15k over 3 years to a traditional IRA and I withdraw $15k, it will only be taxed at my regular tax % correct? If I withdrew $17k, the $2k would be taxed at an additional 10%. Is that correct? I've never fully understood what the additional 10% is on.
Posted on 4/17/13 at 1:48 pm to rmc
The 10% is a penalty on the taxable amount of what you withdrew. If the withdrawal is 100% taxable, then the 10% penalty is on all 100%. Except if you qualify for one of the exceptions, which are listed on IRS site.
Posted on 4/17/13 at 1:55 pm to CHSBears
Damn... so if you are in the 25% tax bracket and you withdraw early and the withdrawal is taxable you get hit for 35%. I thought it was just on any appreciation or earnings above the contributions.
This post was edited on 4/17/13 at 1:56 pm
Posted on 4/17/13 at 2:18 pm to rmc
quote:
Damn... so if you are in the 25% tax bracket and you withdraw early and the withdrawal is taxable you get hit for 35%.
Right
quote:
I thought it was just on any appreciation or earnings above the contributions.
Why would you think that? You've paid 0 taxes on the traditional IRA. SO when you pull it out, you are taxed.
Posted on 4/17/13 at 2:30 pm to reb13
quote:
Ok, so I have one year of grad school left. That seems to be eligible correct? (Tuition, room and board etc)
If you use the monies for that purpose - not if you use them to pay off student loans like you stated in the OP.
Posted on 4/17/13 at 3:00 pm to Broke
quote:
Why would you think that? You've paid 0 taxes on the traditional IRA. SO when you pull it out, you are taxed.
The 10%, not the regular tax rate. I understand its tax deferred. I always just through the 10% was on anything you take out above what you put in if its early with no exemptions.
Posted on 4/17/13 at 3:03 pm to krehn11
quote:
If you use the monies for that purpose - not if you use them to pay off student loans like you stated in the OP.
Alright cool deal, thanks.
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