Withdrawals from IRAs: When owner is under age 59 ½
MontGuide 200308
Marsha A. Goetting, MSU Kristen G. Juras, School of Law, University of Montana
Revised 2003
Marsha A. Goetting
MSU Extension Family Economics Specialist
P. O. Box 172800 Montana State University Bozeman, MT 59717 406-994-5695
6 MontGuides
1. Individual Retirement Accounts 2. Shopping for an IRA 3. Withdrawals from IRAs When owner is under 59 ½ When owner is between 59 ½ & 70 ½; turns 70 ½ 4. Inheriting an IRA: Planning techniques Primary beneficiaries Successor beneficiaries
Individual Retirement Accounts
• www.montana.edu
• Search:
Individual Retirement Accounts
IRA Tax Law Changes
• Economic Growth & Tax Relief Reconciliation Act of 2001
Withdrawals
• General Rule
Subject to 10% penalty on amount withdrawn if owner is under age 59 ½
Withdrawals before 59 ½
•Can be made without 10% excise
tax under certain circumstances
1. Medical Expenses
• Qualified
unreimbursed medical expenses greater than 7.5% of adjusted income.
2. Health Insurance
• Premiums by an unemployed person
12 or more weeks
3. First-time home buyer expenses
• Qualified acquisition costs up to $10,000
Principal residence
• • • • • IRA owner His/her spouse Children Grandchildren Ancestors
4. Qualified higher education expenses
• • • • Tuition & Fees Textbooks Supplies Computer Equipment
4. If at least half-time
student
• Qualified Expenses include Room Board
4. Higher Education
Qualified Users
• • • • IRA owner His/her spouse Children Grandchildren
5. Disability
• Withdrawal due to disability of account holder
No 10% penalty
6. Death
•Withdrawal due to death of account holder
No 10% penalty
7. Equal payments based on life expectancy
• Owner • Owner & beneficiary
Question #8
•
What % of IRA owners made a withdrawal from a traditional IRA during 2002?
Answer: #8
• % of owners making
withdrawals from traditional IRA
16%
Roth Withdrawals
• Tax-year 2002
2%
Withdrawals from IRAs: When owner is under age 59 ½
For review refer to:
MontGuide
200308
Revised 2003