Skip to main content
Message Font: Serif | Sans-Serif
 
No. of Recommendations: 0
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 He understands that a 10% penalty would apply to any amount withdrawn to pay off some of the debt.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.
Print the post  

Announcements

Disclaimer:
In accordance with IRS Circular 230, you cannot use the contents of any post on The Motley Fool's message boards to avoid tax-related penalties under the Internal Revenue Code or applicable state or local tax law provisions.
What was Your Dumbest Investment?
Share it with us -- and learn from others' stories of flubs.
When Life Gives You Lemons
We all have had hardships and made poor decisions. The important thing is how we respond and grow. Read the story of a Fool who started from nothing, and looks to gain everything.
Contact Us
Contact Customer Service and other Fool departments here.
Work for Fools?
Winner of the Washingtonian great places to work, and Glassdoor #1 Company to Work For 2015! Have access to all of TMF's online and email products for FREE, and be paid for your contributions to TMF! Click the link and start your Fool career.