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If I withdrawn 100% of my IRA for downpayment of new home (over

73 years old) what would...
If I withdrawn 100% of my IRA for downpayment of new home (over 73 years old) what would tax be like. I already have a home but it is listed as 3-unit.
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Answered in 2 minutes by:
6/1/2009
Bill
Bill, Enrolled Agent
Category: Tax
Satisfied Customers: 3,153
Experience: EA, CEBS - 35 years experience providing financial advice
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It would depend on the amount that you are withdrawing, your filing status, and the type and amount of your other income. If you provide me with that information then I can give an estimate of the taxes that would be due.
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Customer reply replied 8 years ago
The withdrawal will probably be taken from two funds around $70,000. Our filing status is married with income from retirement LAUSD, plus p/T College Professor income, and Social Security - total reported last year $160,505.

If your income is approximately the same as last year then your total gross income with the additional $70,000 from the IRA would be $230,505 and the federal income tax attributable to the $70,000 would be about $19,600 (28%). The distribution will also be subject to CA taxes (maximum of 9.3% tax rate) assuming you are a CA resident.

 

However, if you previously made any nondeductible IRA contributions then a portion of the withdrawal will be tax-free.

 

http://www.ftb.ca.gov/forms/2008/08_1005.pdf

 

Bill
Bill, Enrolled Agent
Category: Tax
Satisfied Customers: 3,153
Experience: EA, CEBS - 35 years experience providing financial advice
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By tax-free withdrawals I mean that if you have ever made any nondeductible IRA contributions in previous years, then these amounts can be withdrawn tax-free because you already paid taxes on the contributions. If you had made these types of contributions, then you should have filed Form 8606 in the years that you made the contributions.

 

http://www.irs.gov/pub/irs-pdf/f8606.pdf

 

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