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Barbara
Barbara, Enrolled Agent
Category: Tax
Satisfied Customers: 1218
Experience:  16+ years of experience in tax preparation; 25+ years of experience as a real estate/corporate paralegal.
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My mother, who is 67 years of age now, retired two years ago

Customer Question

My mother, who is 67 years of age now, retired two years ago and combined two separate 401K accounts from her previous employers into one Traditional IRA account at CHASE bank. She would like to withdraw those funds now and we are wondering what, if any, tax implications are involved. Please advise. Thank you.
Submitted: 1 year ago.
Category: Tax
Expert:  Barbara replied 1 year ago.

Welcome. My name is XXXXX XXXXX it will be my pleasure to assist you with your tax question today.

 

Based on the information contained in your question, your mom would pay income tax on the amount withdrawn from her traditional IRA, but she would not be subject to an early withdrawal penalty of 10% since she is over 59 1/2 years of age. Chase will most likely provide the appropriate paperwork to your mom so she can decide if she wants to have the tax withheld at the time of withdrawal of the funds rather than when she files her tax return. Depending on the amount withdrawn, this may also impact whether or not part of her social security (if she receives same) will be taxed as well.

 

Please let me know if you require further information or clarification.

 

Thank you and best regards,

Barb

Barbara, Enrolled Agent
Category: Tax
Satisfied Customers: 1218
Experience: 16+ years of experience in tax preparation; 25+ years of experience as a real estate/corporate paralegal.
Barbara and 4 other Tax Specialists are ready to help you
Expert:  Barbara replied 1 year ago.

Hi, Tenoch.

 

I see you are now offline. Please let me know if I can assist you further. If so, please come back to me here.

 

Thank you and best regards,

Barb

Expert:  Barbara replied 1 year ago.

Hi, Tenoch.

 

Just a short note to thank you for the "excellent" rating. It is most appreciated.

 

If you have any questions in the future, please feel free to put "for bkb1956 or Barb" in the subject line, and I will be happy to assist you. Recommendations to family, friends and colleagues are also always appreciated.

 

Thanks again, and have a great evening.

 

Barb

Customer: replied 1 year ago.
Is there any way to shelter the taxes? My mom would like to pay me back for some money I loaned her but would be facing hefty fines if she withdrew now. Any thoughts?
Expert:  Barbara replied 1 year ago.

Thanks for the follow-up question, Tenoch.

 

If your mom withdraws the money from her traditional IRA, she will have to pay the tax on the withdrawal amount because the money went in as pre-tax dollars.

 

I am sorry if this is not the answer you were looking for, but it is my responsibility to give you correct information.

 

Thank you and best regards,

Barb

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Barbara
Barbara
Enrolled Agent, Paralegal
1151 Satisfied Customers
16+ years of experience in tax preparation; 25+ years of experience as a real estate/corporate paralegal.