BoxheadTim wrote:wbjones wrote: why are you recommending traditional IRA vs Roth ? as long as he doesn't have a huge amt. to roll over, the initial tax bite won't be that much ... then it's tax free coming out 30 yrs from now ....Not to mention that in case E36 M3 really hits the air movement device, the OP would be able to at least withdraw his contributions from a Roth IRA without taxes and penalties.
Also true
...after 5 years, or after 59 1/2.
ProDarwin wrote:BoxheadTim wrote:Also true ...after 5 years, or after 59 1/2.wbjones wrote: why are you recommending traditional IRA vs Roth ? as long as he doesn't have a huge amt. to roll over, the initial tax bite won't be that much ... then it's tax free coming out 30 yrs from now ....Not to mention that in case E36 M3 really hits the air movement device, the OP would be able to at least withdraw his contributions from a Roth IRA without taxes and penalties.
There seems to be a bit of a debate on this, but my reading of the IRS publication's flow chart doesn't support the "after five years or 59 1/2" reading for contributions only. If you however withdraw anything that might be considered earnings, you'll indeed end up with a penalty.
Caveat - I don't play a lawyer or CPA on TV, nor am I a native English speaker. Although I'm fairly decent at faking the latter.
while I'm no lawyer (and haven't stayed at a Holiday Inn Express in yrs) I'm pretty sure that BoxHead is correct ... since the contributions were put in AFTER taxes ... I think they can be withdrawn prior to 59 1/2 ... but before trying to do so, please get competent advice
wbjones wrote: while I'm no lawyer (and haven't stayed at a Holiday Inn Express in yrs) I'm pretty sure that BoxHead is correct ... since the contributions were put in AFTER taxes ... I think they can be withdrawn prior to 59 1/2 ... but before trying to do so, please get competent advice
I think the principle can be withdrawn, but not the capital gains.
No taxes, but there is still the 10% penalty. http://www.fool.com/money/allaboutiras/allaboutiras07.htm
I dunno. Its still a little confusing. I agree with the "get competent advice" route :)
Look at example #1 on the article you linked, the 10% penalty is assess on earnings...
Hmm. I was looking at #2...
Example #2 Paul made a $20,000 conversion from his regular IRA to a Roth IRA in 1998. The entire amount converted was includable in Paul's income for 1998. Paul made no additional contributions or conversions to a Roth IRA in 1998 or in later years. In 2001, before he is age 59 1/2, Paul withdraws $10,000 from the Roth IRA. Paul will have no tax to pay on this withdrawal because he paid income taxes on the full $20,000 he converted in 1998; however, he WILL have to pay a 10% penalty (or $1,000) unless one of the IRA early withdrawal exceptions apply. Why? Because Paul didn't keep the conversion amount in his Roth IRA for the required five-tax-year period since his original conversion.
Ok I finally played around with an IRA calculator. Presuming they take 20% when I cash out the pension, that leaves me with a balance of roughly $6k. Based on the calculator's default settings, that works out to ~$24k when I hit 65. Not bad.
Of course, the rental property should work out better. Figure clearing ~$100/month after mortgage & expenses, and that works out to be $27.6k, plus the equity in the house(which hopefully doesn't drop over the next 23-years).
But really, it seems the smart thing to do is rollover the pension into an IRA, while taking a bit longer to get a house bought & ready to rent.
does a pension get treated differently from a 401K or an IRA ? they can be rolled over into another qualified instrument (as long as the check isn't sent to you) with no taxes
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