ucoc said:
mads said:
Hi, we had withdrawn from our IRA when we purchased our home. We were able to pay the amount back into the IRA within the 60 day rollover. so there will be no back taxes or penalties to be paid for the 2018 tax return. The 60 day rollover rule is: if you withdraw money from your IRA or 401k , you have 60 days to put the exact amount back in a retirement account. If you are not able to do so, the money you withdrew is considered as income for that year. In addition, you need to pay a 10% penalty. You can do the 60 day rollover once every 12 months. Hope this helps.
Thanks for the response. I guess not many people have dealt with this. I guess it could be just simple cash out and pay the penalty and taxes. The 60 day rollover rule is very helpful to know though. Thanks again!
It's not advisable because you are likely to pay 43% or more, to the government. (24% Fed + 10% penalty + 9% State) This is to quote Dave Ramsey now, but would you borrow money at a 43% interest rate? That is effectively what you are doing here.
So following that logic, it would be smarter to max out your highest APR credit card than to withdraw that money. It would be smarter to get a payday loan, or a loan from Vinny the local loan shark, than to do what your wife is planning to do.
I'm not saying this is ideal either, but maybe your wife should first think about getting a 401k loan over withdrawing the money outright and paying that huge tax bill.