YAFT: Yet Another Finance Thread

[TrueBlueLS]

Okay, I know I've been adviced not to cash in my Roth IRA fund. Right now I'm barely hanging onto everything I have and need to pay for. With the transistion of jobs, I've been limited to a really tight budget. I've had to sell items to make ends meet (like my XP1800+ computer) and I'm running out of items to sell. I got a packet in the mail a couple weeks ago with the distribution papers needed to receive money for this. I'm not cashing in the full amount of the IRA so that later on in the year when things get better for me, I can reinvest what I took out plus more. What would be a wise percentage to mark for federal tax withheld on about $280 so that when it comes time for taxes next year, I don't get nailed. Thanks.

 

[woowoo]

Your TAX and
10% PENALTY

Edit for wrong info (roth vs Traditional)

 

[kranky]

You would pay your normal income tax on the amount, plus a 10% penalty on the amount that's included in your gross income. If you don't know what your tax bracket is, pull out your income tax papers from last year, and see how much your tax would have gone up if you had an extra $280 of income. Then add $28 for the 10% penalty.

By the way, you might find that you can escape the early withdrawal penalty. Look here for a list of situations that are exempt from the penalty.

 

[dquan97]

What about borrowing from friends/family? Line of credit from brokerage?

 

[radioouman]

Originally posted by: woowoo
10% TAX
10% PENALTY

Since he has a ROTH IRA, it shouldn't be taxed when it pulls it out, since it was taxed when it went in. But there will still be a penalty.

 

[kranky]

Oh, I didn't know it was a Roth. I thought he had two IRAs. Ignore my earlier post!