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CGassist.168
CGassist.168, Accountant
Category: Capital Gains and Losses
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Experience:  Tax Accountant
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Is there taxon Ira withdrawal after 70 1/2 if proceeds are

Customer Question

Is there taxon Ira withdrawal after 70 1/2 if proceeds are used to buy a house
Submitted: 1 year ago.
Category: Capital Gains and Losses
Expert:  CGassist.168 replied 1 year ago.
Thank you for contacting us today. My name is ***** ***** my goal is to efficiently assist you with your Capital Gains matters.
In brief yes. If it is a traditional IRA, the distributed amount is taxable as ordinary income. It does not matter if you use the money to buy a house. If it is a Roth IRA, the distributed amount is not taxable. SEE BELOW:
Traditional IRA Withdrawals
All of the money in your traditional IRA belongs to you. You can withdraw any part or all of your funds from your traditional IRA at any time for any reason, but there will be tax considerations. All withdrawals from your traditional IRA are taxed as ordinary income in the year you take the withdrawal. If you withdraw funds before you reach age 59 1/2 the Internal Revenue Service assesses an additional 10 percent tax penalty. You must begin taking minimum withdrawals from your traditional IRA in the year you turn age 70 1/2. The amount you withdraw at that time is taxed as ordinary income, but the funds that remain in your IRA continue to grow tax deferred regardless of your age.
Roth IRA Withdrawals
Qualified withdrawals from your Roth IRA are completely free from federal income taxes and penalties. You must have held the Roth IRA for at least five years and are at least age 59 1/2. Any Roth withdrawal taken before age 59 1/2 is a nonqualified withdrawal that may be subject to federal income tax and a 10-percent penalty tax. You are not required to start taking minimum withdrawals from your Roth IRA at age 70 1/2, or at any age. In fact, since you are not required to withdraw money from your Roth IRA at all, you can leave the funds in your account to benefit your heirs.
REFERENCE SOURCE:
http://finance.zacks.com/iras-taxable-after-701-2-years-2609.html
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