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Robin D.
Robin D., Senior Tax Advisor 4
Category: Tax
Satisfied Customers: 13343
Experience:  15years with H & R Block. Divisional leader, Instructor
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If you have a traditional IRA and are withdrawing less than

Customer Question

If you have a traditional IRA and are withdrawing less than the amount you originally put in, and you only have an earned income of 7K (no other income from assets, just soc sec)
Then do you have to pay the 10% tax on withdrawal of that sum less than original input on the trad IRA.
Also, along with answer to above, then what is the income limit for not being taxed on withdrawing a sum from IRA that is less than your original investment?
Submitted: 1 year ago.
Category: Tax
Expert:  Robin D. replied 1 year ago.
Hello and thanks for trusting me to help you today. I am a tax adviser with over 20 years of experience.
A Traditional IRA allows for tax deferred treatment of earnings and generally a deduction from income for the amount contributed.
When you begin taking the money out all amounts are taxable (unless you were not allowed a tax adjustment when you made the contributions).
The 10% penalty is imposed on amounts taken out that are taxable if the distribution is EARLY. Early refers to you not being 59 1/2 when you take money out.
Simply this means that a Traditional IRA distribution of any amount is going to be taxable and if you are not 59 1/2 (or meet another exception) you will pay tax and an additional 10% penalty.
Exceptions to this 10% additional tax for early distributions are as follows:
Made to a beneficiary or estate on account of the IRA owner's death
Made on account of disability
Made as part of a series of substantially equal periodic payments for your life (or life expectancy) or the joint lives (or joint life expectancies) of you and your designated beneficiary
Qualified first-time homebuyer distributions
Not in excess of your qualified higher education expenses
Not in excess of certain medical insurance premiums paid while unemployed
Not in excess of your unreimbursed medical expenses that are more than a certain percentage of your adjusted gross income
Due to an IRS levy, or
A qualified reservist distribution
The 10% additional tax applies to the part of the distribution that you have to include in gross income. It is in addition to any regular income tax on that amount.
I sincerely ***** ***** have explained this complicated subject but please let me know if you need clarification.