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IRA DISTRIBUTION

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tennis22

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Post Posted: Fri Apr 23, 2010 8:20 am    Post subject: IRA DISTRIBUTION
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I have an IRA and want to use the funds to pay down 2nd mortgage or 1st mortgage or sell my home and use the difference I need to bring to closing to be from my IRA... Will this be a penalty ?
Tracy K Ft Myers Fl

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Post Posted: Fri Apr 23, 2010 8:50 am    Post subject:
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If you're not 59 1/2 years of age, any distribution from your IRA will result in a penalty, yes; in addition, you'll pay taxes on that amount withdrawn. In any event, if you need the funds, it's not necessarily a bad thing.
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Post Posted: Fri Apr 23, 2010 11:16 pm    Post subject:
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Hi tennis,

Withdrawal of money from your IRA before the age of 59 1/2 years will attract a penalty of 10%. Besides, the withdrawn amount will be subject to income taxes. However, if you desperately need the money and you have a 401k or a 403b retirement account, you may consider taking a loan from these accounts. The interest you pay on the loan is deposited back into your account. So, you basically take a loan from your own funds and pay it back to yourself. However, if you fail to repay the loan on schedule, the loan will be considered as an early distribution.
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Post Posted: Wed Apr 28, 2010 11:27 am    Post subject:
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Since Traditional IRA's are pretax dollars, any withdrawals taken before age 59 1/2 would be subject to penalties.

If you have a Roth IRA, which is post tax dollars, you can withdraw the money you have contributed without penalty. However, if you try to withdraw interest earned on a Roth IRA, that portion would be subject to penalties.

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