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Roth IRA Penalty for Early Distributions – Paul Gaulkin CPA

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In the event a premature distribution is made from a Roth IRA to a taxpayer, the distribution will be subject to a 10 percent penalty of the amount that must be reported as a taxable distribution. Explaining the Penalty If an individual had contributed $10,000 to a Roth IRA and the value of the account was $15,000, the difference between the two ($5,000) would be considered earnings. If the individual chose to withdraw all of the Roth IRA funds and … Read more

IRA Withdrawal Rules Life Expectancy – Paul Gaulkin CPA

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In the event the owner of a traditional IRA dies before the required distribution date, there are two options for which a beneficiary can choose to effectively begin taking distributions. These two options are: 1. The life expectancy rule; or 2. The five year rule Below we will go into detail of the differences of these two options and how they will effect a beneficiaries distributions from the decedents traditional IRA. Life Expectancy Rule The life expectancy rule basically states … Read more

Minimum Required Distribution during Lifetime – Paul Gaulkin CPA

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Once a taxpayer reaches the age of 70 and a half they are required by the IRS to start making minimum distributions from their traditional IRA. The taxpayer is allowed however to begin making the distributions on April 1st of the year following the year in which they have turned 70 and a half years old. It is important to remember that if a taxpayer waits until April 1st of the following year they will be required to take two … Read more

Eligible Rollover Distribution – Paul Gaulkin CPA

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A rollover is basically a transfer of a distribution from one tax advantaged plan to another tax advantaged plan in which the individual is able to maintain the form plan’s tax advantage with respect to the amount transferred. Distributions that may be rolled over are distributions from: 1. A qualified plan 2. A 403(b) tax sheltered annuity 3. An IRS’ 4. A 457 governmental plan Once a distribution is made from one plan to another, the taxpayer does not have … Read more