Tax consequences of liquidating an ira
This penalty equals 10 percent of the taxable portion of the liquidation unless an exception, such as paying for higher education expenses or medical costs exceeding a specified percentage of your adjusted gross income.
This penalty is added to whatever income taxes you owe on the distribution.
On Line 15b, report the ,000 taxable portion and on Line 15a, report the entire ,000 liquidation.
Complete Form 5329, Part I, to figure the additional tax penalty of the liquidation.
For example, if you're permanently disabled, you can withdraw as much as you want penalty-free.
Or, if you're going back to school, you can withdraw up to the cost of tuition, fees and, if you're enrolled at least half-time, room and board without being penalized.