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Financial Planning / Tax Strategies


Subject:  rollover IRA withdrawal Date:  7/12/2005  4:57 PM
Author:  HokeySon Number:  79988 of 131788

Folks, the situation is as follows:

taxpayer loses job in 2004 and starts own business. Business is not making any money and taxpayer has incurred huge debts to get it going. He has small amount in rollover IRA (maybe 1/4 of the debts). He understands that a 10% penalty would apply to any amount withdrawn to pay off some of the debt. What I would like to know is whether the withdrawal is taxed at the taxpayer's ordinary income rate for the year of the withdrawal (plus the 10%) or some different rate? Also, assuming no other income, is there a point where the amount of the withdrawal affects the tax rate (i.e. are there "extra" penalties for taking out 50k instead of 25k in the form of higher tax rate)? thanks.
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