Easier Rules On IRA Rollover Waivers
A new IRS ruling may provide tax relief on late rollovers by some IRA owners.
Normally, if you take money out of your IRA, you're responsible for tax on the distribution, plus a potential 10% penalty if you make an early withdrawal – before you reach age 59½. But you can avoid current tax liability if you roll over funds from the IRA into another IRA within 60 days.
The surest way to do that is to make a "trustee to trustee" transfer, from one financial company to another. If the money never touches your hands, none of it will be withheld for possible taxes. However, if you have an immediate but temporary need for money, you could use the rollover process to give yourself a short-term loan—you can have funds paid to you and then redeposit the same amount in an IRA within 60 days. Yet while you won't ultimately be taxed on the rollover, 20% of the amount that you withdraw will be withheld for taxes; you'll need to recoup the money when you file your tax return.
© 2020 Advisor Products Inc. All Rights Reserved.
- What Would You Do For A Bigger Salary Or More Benefits?
- Seek The Comfort Of A Pet Trust
- Locate A Tax Shelter Near A School
- 4 Year-End Strategies For Investors
- 5 Key Documents In An Estate Plan
- What's The Truth About Probate?
- Remember The Lesson Of Rebalancing
- Tie The Knot For Retirement With A Spousal IRA
- Higher-Paying Job May End Up Costing You
- 4 Cornerstones Of Diversification
- With Or Without The New Fiduciary Rule, We Have Your Back
- Social Security Options Remain
- Do Robo Advisors Have Glitches?
- Cash In On This Gift Tax Break For Section 529 Plans
- Millennials Want To Save More And Resist Impulse Purchases