Tax consequences of liquidating ira divorced singles dating advice
Making the decision to close your business is not easy, but often times, it is absolutely the correct thing to do.
Once you make the decision to close your business, the next inevitable question is: Now what?
For some reason I get this question a lot in my day job, so I thought I’d provide a little clarification on some of the rules regarding withdrawals from Individual Retirement Arrangements, or IRAs.
IRAs were designed to provide an opportunity for folks to save for retirement on a pre-tax, tax-deferred basis.
By the way, you literally must reach age 59 1/2 – not 59, 5 months and 15 days.
You can take the money any time on the day you turn 59 1/2 or after.
You can withdraw your money from an IRA any time you’d like, but you just better be aware of the tax and penalty ramifications.
Again, there is no escaping the taxes (unless of course you are in a Roth IRA) so just be aware that every dollar you pull out will be as if you earned that money for the year – it counts as ordinary income.
There are some exeptions to taking money out before age 59 1/2, so let’s take a look: The general rule is that if you withdraw money from your IRA before 59 1/2 the IRS whacks you with a 10% penalty.
So, ideally you need to wait until you reach that age. For example, the exception that says you can take the money in the form of annuity – basically what the IRS means here is that you must take “substantially equal period payments” – in other words a set amount per year for either a) five years or b) til 59 1/2, whichever is longer.
We try our best to keep the information current, but things are always changing so it may be different now than when it was first published.
Also, all the pages on Seed Time help us pay the bills by using affiliate relationships with Amazon, Google, e Bay and others but our opinions are NEVER for sale.