Distributions, Early Withdrawals, 10% Additional Tax
This is archived information that pertains only to the 2002 Tax Year. If you
are looking for information for the current tax year, go to the Tax Prep Help Area.
How do I calculate minimum the amount that must be withdrawn from my IRA after age 70 1/2?
You will need to get Publication 590 (PDF), Individual Retirement Arrangements (IRAs) to find out this amount. The minimum distribution is computed using one of three tables found in Publication 590. Table I is used by beneficiaries. Table II is for use by owners who have spouses who are more than 10 years younger. Table III is generally for use by unmarried owners.
References: 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 (PDF), Individual Retirement Arrangements (IRAs), you will need to pay an additional 10 percent tax on early distributions from qualified retirement plans that is reported on line 58 of Form 1040. You may need to complete Form 5329 (PDF), Additional Taxes on Qualified Plans (including IRAs) and Other Tax-Favored Accounts, and attach it to the tax return, if required.
References: - Publication 590 (PDF), Individual Retirement Arrangements (IRAs)
- Form 5329 (PDF), Additional Taxes On Qualified Plans (Including IRAs), and Other Tax-Favored Accounts
- Instructions for Form 5329, Additional Taxes On Qualified Plans (Including IRAs), and Other Tax-Favored Accounts
- Tax Topic 451, Individual Retirement Arrangements (IRAs)
- Tax Topic 557, Tax on Early Distributions from Traditional and Roth IRA's.
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 additional 10 percent 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 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 557, Tax on Early Distribution from Traditional and Roth IRA's.
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 additional 10 percent 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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