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Robin D.
Robin D., Senior Tax Advisor 4
Category: Tax
Satisfied Customers: 13317
Experience:  15years with H & R Block. Divisional leader, Instructor
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By mistake, I liquidated my IRA account at Fidelity. Now IRS

Customer Question

By mistake, I liquidated my IRA account at Fidelity. Now IRS wants a penalty of over $8,000. HELP
Submitted: 8 months ago.
Category: Tax
Expert:  Robin D. replied 8 months ago.

Hello

The penalty is most likely because you are not 59 1/2 . There are some exceptions to this penalty.

First did you put that money into another IRA? If so and you did that within 60 days of taking it out then that is a rollover.

Expert:  Robin D. replied 8 months ago.

Distributions that are not taxable, such as distributions that you roll over to another qualified retirement plan are not subject to this additional 10% tax.

Expert:  Robin D. replied 8 months ago.

In case you did not rollover the money.

There are certain exceptions to this additional 10% tax. The following exceptions apply to distributions from any qualified retirement plan:

  • Distributions made to your beneficiary or estate on or after your death.
  • Distributions made because you are totally and permanently disabled.
  • Distributions made as part of a series of substantially equal periodic payments over your life expectancy or the life expectancies of you and your designated beneficiary. If these distributions are from a qualified plan other than an IRA, you must separate from service with this employer before the payments begin for this exception to apply.
  • Distributions to the extent you have deductible medical expenses that exceed 10% of your adjusted gross income (7.5% if you or your spouse is age 65 or over) whether or not you itemize your deductions for the year. The 7.5% limitation is effective only from January 1, 2013 to December 31, 2016 for individuals age 65 and older and their spouses.

The only one I think may help you is the medical. If you had medical expenses then that may at least reduce the penalty.

Expert:  Robin D. replied 8 months ago.

Please respond and let me know

Expert:  Robin D. replied 8 months ago.

I am assuming you did not put the money into another IRA so yes you have to pay tax on all and you will have a penalty if you did not meet an exception above.