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Lane
Lane, JD, CFP, MBA, CRPS
Category: Tax
Satisfied Customers: 4349
Experience:  Juris Doctorate, CFP and MBA, Providing Financial & Tax advice since 1986
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I have a Brokerage Retirement account at my local bank worth

Resolved Question:

I have a Brokerage Retirement account at my local bank worth $6,627.48. I will be turning 60 years old in December 2013. I would like to close the account and pay whatever taxes are due for withdrawing funds from that account. How do I go about doing this?
Submitted: 1 year ago.
Category: Tax
Expert:  Lane replied 1 year ago.

Lane :

Hi

Lane :

Your bank will have an IRA distribution form, that you will complete

Lane :

Because you are onlder than 59 and 1/2, there will be no 10% penalty tax

Lane :

sorry "older"

Customer:

what would the penalty be for withdrawing that amount?

Lane :

The form will have a line to have tax withheld, if you like to handle it that way, then next year in Jabuary you will get a 1099 indicating the taxable income and showing the withholding, which will offset the tax

Lane :

No penaly ... It will juat be added to your icome for the year

Lane :

so if you have 50,000 of income that year, you'll actually hav 56,627

Lane :

on which to pay taxes

Lane :

so, essentially, it will be taxed at your marginal tax bracket

Customer:

Is there a way to pay the taxes on this now?

Lane :

You won't actually PAY the taxes, but it will work just like a W-2 ... you can have them withhold the taxes when distributing, then when you get the 1099 next year, you'll have withholding already done to offset the tax owed

Customer:

what percentage should they withhold?

Lane :

If you gie me a feel for your other income and how you file? (married filing jointly, single) then I can approximat your bracket and tell you how much t have withheld

Lane :

10% is a very common, but again, can you give me your approximate income and filing status?

Lane :

If you're in, say, the 15% bracket ... then withholding 15% will cover the taxes

Customer:

single - about 40K

Lane :

ok there will be a 3900 person exemption and 6100 standard deduction if nyou don't itemize ... so that makes your TAXABLE income (if you don't put monty into a 401(k) or have other deductions $30,000

Lane :

(sorry for all the typos) .. getting the tax brackets now

Lane :































taxable income from $0 to $8,925,



10%



taxable income over $8,925 to $36,250



15%



taxable income over $36,250 to $87,850



25%



on taxable income over $87,850 to $183,250



28%



on taxable income over $183,250 to $398,350



33%



on taxable income over $398,350 to $400,000



35%



on taxable income over $400,000



39.6%


Lane :

So ... 15% will do ot

Lane :

it

Lane :

so you'll just have them withhold 15% (that will be a box on the distribution form at the bank)

Customer:

okay. Thanks - sorry for stupid question - so should I withhold 15% or 25% for this distribution?

Customer:

sorry didn't read the end - got it

Customer:

thank you - that answered my question.

Lane :

nope there ARE no stupid questons ... but because your TAXABLE income will be 30,000 that extra $6000 will (all but $400 or so) be in the 15% bracket

Customer:

Great - thanks again.

Lane :

You're vry welcome

Lane :

If this HAS helped, I would appreciate a feedback rating of 3 (OK) or better … That's the only way they will pay us here.


HOWEVER, if you need more on this, PLEASE COME BACK here, so you won't be charged for another question.

Customer:

okay thanks.

Lane, JD, CFP, MBA, CRPS
Category: Tax
Satisfied Customers: 4349
Experience: Juris Doctorate, CFP and MBA, Providing Financial & Tax advice since 1986
Lane and 5 other Tax Specialists are ready to help you
Expert:  Lane replied 1 year ago.

Thanks so much for the rating!

If you'd like to work with ME again just say "For Lane only," at the beginning of your next question


OR set me up as your preferred expert on your home page.


Regardless, thanks again,

Lane

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Lane
Lane
Tax Professional
4349 Satisfied Customers
Juris Doctorate, CFP and MBA, Providing Financial & Tax advice since 1986