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Thanks for the reply Roy. I only have a minute now. I'm curious about your statement "...there are other ways that this could have been accomplished." I offered to make a direct transfer of IRA funds from my account to my wife's account which would have been permissible under the tax laws as I was advised and which would have been tax and penalty free. But she wanted funds for immediate use and did not want to pay taxes and penalties herself if she withdrew from her IRA after the transfer. So what other ways are (were) there that this could have been accomplished?

Also, I thought I was clear on my tax situation but maybe not. I'm in the 28% federal and 7% state (NY) tax brackets.

Finally, I agree that I will incur a heavy cost to withdraw these funds early. On the $20,000, I will incur about $7,000 in taxes and $2,000 in federal penalty (I don't know about state); $9,000 is a pretty heavy price to pay. Sure, I will have to pay the income taxes eventually, but later with cheaper dollars when I'm 59 1/2+ is better than now (assuming that tax rates are the same or lower).

Anyway, thanks again for the advise. I might replace the monies in my IRA if only to buy more time to research this in depth.

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