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<If you're eligible to do a rollover - and actually do it! - you can avoid both the penalty AND the tax on any amounts returned to your IRA. That's why this is a critical question that Charlie asked.>

I don't mean to pick on the person who asked the question. After all it is always better to ask than not to ask. But why do so many people perform a transaction first and then ask about the consequences after the fact? I know IRA's can be very tricky and even our "pros" can get confused on some of the finer points. Still, I think that the original poster has been given the usual good series of answers here. Hopefully, there is still time for them to fix their mistake.

In addition to IRA questions after the fact, we see many questions from people who have sold stock but have no idea whether they have a gain or a loss because of poor record keeping. The lack of records can be of their own doing or caused by someone who has given them a gift of the stock. We have also seen people add names to the title of their houses "to make it easier" to pass the asset on later. Of course this can often result in a big unnecessary tax bill later on. Or it can result in the parent losing their home when the person added to the title goes through a divorce or has a judgement against them.

I guess my point is that major financial decisions or transactions should be entered into with at least some understanding of the potential consequences. If reaching that level of understanding involves getting professional advice, you may find the cost a small price to pay for avoiding a big mistake. Many times this board can help you on the way to learning what questions to ask or what to look out for. Sometimes we can use our mistakes to help you avoid making the same ones. The people on this board who regularly give their time are providing a great service to all of us with questions. They can be even more helpful if you seek their advice before taking an action.

BRG (sorry for the mini rant)

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