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Megan C
Megan C, Certified Public Accountant (CPA)
Category: Tax
Satisfied Customers: 16576
Experience:  Licensed CPA, CFE, CMA, CGMA who teaches accounting courses at Master's Level
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If I withdrew funds from my IRA after being let go from my

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If I withdrew funds from my IRA after being let go from my job and become Un employed, The funds are used to continue paying many bills, including my Cal Cobra Health insurance and medical bills due to a short term disability. Can I deduct any of these costs from my IRA withdrawal?

MyVirtualCPA :

Thanks for asking your question! I'm sorry to hear about your tax issue and I'm going to try my best to help you understand or resolve it.

MyVirtualCPA :

If you are unemployed, you can take penalty free withdrawals from your IRA to pay for your medical premiums

MyVirtualCPA :

However, you will still owe income tax on the withdrawal from your 401(k) plan

MyVirtualCPA :

You cannot get away from paying income tax on your IRA withdrawal, although you can minimize any penalty that you might pay.

MyVirtualCPA :

Is there anything else that I can assist you with today? If not, please rate my response as "excellent" so that I may receive credit for assisting you today. Thanks again for using JustAnswer.com

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Denzil,

Please take a moment to review my response and rate my response as "excellent" so that I may receive credit.

I see you were unable to join our live chat. I do apologize for our technical difficulties.

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Customer: replied 3 years ago.


Yes we got disconnected, but got your response on the IRA withdrawal question.


 


I was a little confused on the 401k response? Naturally when I was let go, I was able to transfer my 401k directly into an IRA account and then made my withdrawals. From your response on the 401k taxes, will I be expected to be fined for making the transition? Unless I misunderstood your response, I was not aware of such fees or taxes owed on the transfer from 401k to an IRA?


 

There is no tax on the transfer of the 401(k) to the IRA, but if you take money out from your IRA then you will be assessed tax and penalties.

Please let me know if that is unclear. Please take a moment to rate this response as "excellent" so that I may receive credit for assisting you today.
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