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Im 53 years old and have to cash out my TRAD IRA. I have

I'm 53 years old and...
I'm 53 years old and have to cash out my TRAD IRA.
I have 91,000 to cash out.
I make 85,000 per year.
Approximately what would I be left with after penalty and taxes?
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Answered in 8 minutes by:
7/1/2011
Robin D.
Robin D., Senior Tax Advisor 4
Category: Tax
Satisfied Customers: 15,871
Experience: 15years with H & R Block. Divisional leader, Instructor
Verified

Robin D :

Your estimated tax for 2011 would be $40237 as single and standard deduction.
You will also have a 10% penalty ($9100) for being under 59 1/2 on the distribution this would add to your tax liabilty. This would bring your total tax to $49337 for the year.

Robin D :

If you request a distribution the 20% withholding ($18200) on the IRA would mean that you would receive $72800 on the distribution. If you have a basis in the IRA that portion would not be taxable. Basis would refer to any amount inthe IRA that was not allowed as an adjustment to your income in the year of contribution.

Robin D :

The penalty is not calculated until you file your return. So it would be added to the tax liabiltiy. You would most probably wish to make an estimated tax paymrnt to cover yourself.

Robin D :

Did that cover everything you were interested in?

Customer:

One question- this is over and above all payroll taxes I pay?

Robin D :

No, any withholding you have will be subtracted from the tax liability on your tax return.

Customer:

So I would owe next April 15th approx. 50,000 if I usually break

Robin D :

In total. But the withholding you have is important. If you generally break even the you would need to be concerned with hte 10% penalty ($9100) this amount would not be withheld anywhere. The withholding on the distribution will most probably cover you but if you want to check to make sure your withholding will cover you for the increase in income the IRS has a calculator you can use to see if enough will be withheld for you
http://www.irs.gov/individuals/article/0,,id=96196,00.html
Use the above link to access the calculator

Customer:

even with the IRS.

Robin D :

The calculator will give you a heads up and you can see if by changing your withholding amounts now the tax can be covered by changing your withholding for the remainder of 2011.

Customer:

Thank You, XXXXX XXXXX been alot of help.

Robin D :

Thank you, XXXXX XXXXX remember, you can always come back even after you click ACCEPT

Customer:

Ok

Robin D.
Robin D., Senior Tax Advisor 4
Category: Tax
Satisfied Customers: 15,871
Experience: 15years with H & R Block. Divisional leader, Instructor
Verified
Robin D. and 87 other Tax Specialists are ready to help you
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Customer reply replied 6 years ago
Will they take any tax out at the money distrbution?
Yes, they should withhold 20% but you can see if the administrator will withhold more to cover the penalty.
Ask Your Own Tax Question
Customer reply replied 6 years ago
Thank you

You are welcome

 

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Robin D.
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Category: Tax
Satisfied Customers: 15,871
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