Tax implications of taking the surrender value of my IRA annuity. It is less than $2000, I am only 28 yrs old and live in GA. I am out of work and need the money, but need to know the tax fallout as I am so youg to be taking the full surrender value.
State/Country relating to question: Georgia
Just looking around the internet for free tax help...does not exist for a questions like mine...
If it is a traditional IRA and it was funded with deductible IRA contributions or a rollover from another retirement plan of pre-tax monies then it will be subject to federal and state income taxes at your tax rate. Your tax rate on the distribution will be based on the amount of your other income (including taxable unemployment compensation), filing status, and deductions. For example, if your other income for the year was $20,000 and you file single, then the federal income taxes would be $300 (15% of $2,000).
You will also be subject to a 10% federal Income Tax penalty because you are under age 59 1/2 unless an exception applies (such as to pay for educational expenses, health insurance premiums, etc).
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