How do I calculate minimum amount that must be withdrawn from my IRA after age 70 1/2?
You will need to get Publication 590, Individual Retirement Arrangements (IRAs) (Including Roth IRAs and Education IRAs) to find out this amount. It is based on joint or single annuity and the tables are in this publication.
References:
- Publication 590, Individual Retirement Arrangements (IRAs) (Including Roth IRAs and Education IRAs)
If we cash in an IRA account while in our thirties, what forms do we need to fill out?
You will need to file a Form 1040 and show the amount of withdrawal from your IRA. Since you took the withdrawal before reaching age 59 1/2, unless you meet certain exceptions listed in Publication 590, Individual Retirement Arrangements (IRAs) (Including Roth IRAs and Education IRAs), you will need to pay a 10 percent additional tax on early distributions from qualified retirement plans that is reported on line 53 of Form 1040. You need to complete Form 5329, Additional Taxes Attributable to IRAs, Other Qualified Retirement Plans, Annuities, Modified Endowment Contracts and MSAs and attach it to the tax return.
References:
- Publication 590, Individual Retirement Arrangements (IRAs) (Including Roth IRAs and Education IRAs)
- Form 5329, Additional Taxes Attributable to IRAs, Other Qualified Retirement Plans, Annuities, Modified Endowment Contracts and MSAs
- Instructions for Form 5329, Additional Taxes Attributable to IRAs, Other Qualified Retirement Plans, Annuities, Modified Endowment Contracts and MSAs
- Tax Topic 451, Individual retirement arrangements (IRAs)
- Tax Topic 558, Tax on early distributions from retirement plans
If we cash in an IRA account 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 1040-ES, Estimated Tax for Individuals, and any 10 percent additional tax on early distributions from qualified retirement plans on Form 5329, Additional Taxes Attributable to IRAs, Other Qualified Retirement Plans, Annuities, Modified Endowment Contracts, and MSAs.
References:
- Form 1040ES, Estimated Tax for Individuals
- Form 5329, Additional Taxes Attributable to IRAs, Other Qualified Retirement Plans, Annuities, Modified Endowment Contracts, and MSAs
- Publication 505, Tax Withholding and Estimated Tax
- Tax Topic 451, Individual retirement arrangements (IRAs)
- Tax Topic 558, Tax on early distributions from retirement plans
Can the 10% penalty for an early withdrawal from an IRA 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 of an IRA does not qualify as a penalty for withdrawal of a savings account.
References:
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