Cashing out an IRA/savings fund

IloveTHIS

IloveTHIS

Steel Belt
@Steel
Joined
Dec 7, 2011
Messages
30,819
Reaction score
13,366
I have an old/forgotten savings IRA a family member started on my behalf a long time ago. I realized it the other day it has almost 7k in it and I could REALLY use that money. Yes I'm poor, fuck you.

So its my understanding withdrawing that money before I'm an old ass man can hit me with a 10% fee and state+federal taxes, but there are exceptions. I am moving into a new house, had a medical emergency within the last year+etc. Any bros ever done this and managed to get the fees waved? How long did it take to get your monies?

My actual savings are in another account I dont mess with but I sure as fuck want to cash this bitch out.
 
There are only a few exceptions from the 10% fed penalty, but keep in mind that you are going to pay taxes no matter what. The exceptions from the 10% fed penalty are older than 59.5 years old, After becoming Disabled,To the extent the Tax Payer has unreimbursed medical expenses exceeding 10% of your AGI, qualified higher education costs, Used to buy, build or rebuild first home and a few other exceptions but I do not think it will apply to you.

Use it as a last chance scenario, I always tell clients that retirement is not to be touched. In many cases with the penalty and taxes will add up close to 50%. I would look at other ways of coming up with the money. I you have a 401(k) many times you can borrow against it but that has issues as well.

Good luck
 
I'd borrow against my 401k before I'd take that hit on the IRA. If you don't have any other means and it's life and death then do what ya gotta do in that case.
 
IloveTHIS said:
I have an old/forgotten savings IRA a family member started on my behalf a long time ago. I realized it the other day it has almost 7k in it and I could REALLY use that money. Yes I'm poor, fuck you.

So its my understanding withdrawing that money before I'm an old ass man can hit me with a 10% fee and state+federal taxes, but there are exceptions. I am moving into a new house, had a medical emergency within the last year+etc. Any bros ever done this and managed to get the fees waved? How long did it take to get your monies?

My actual savings are in another account I dont mess with but I sure as fuck want to cash this bitch out.
Click to expand...

Roll it over and forget about it. You've managed to survive this long without it , what's the difference? You'll get fucked in the ass on penalties and taxes too which you already know.

59.5 year old Ilovethis will get a LOT more mileage out of that 7 grand than you will now.
 
homer said:
There are only a few exceptions from the 10% fed penalty, but keep in mind that you are going to pay taxes no matter what. The exceptions from the 10% fed penalty are older than 59.5 years old, After becoming Disabled,To the extent the Tax Payer has unreimbursed medical expenses exceeding 10% of your AGI, qualified higher education costs, Used to buy, build or rebuild first home and a few other exceptions but I do not think it will apply to you.

Use it as a last chance scenario, I always tell clients that retirement is not to be touched. In many cases with the penalty and taxes will add up close to 50%. I would look at other ways of coming up with the money. I you have a 401(k) many times you can borrow against it but that has issues as well.

Good luck
Click to expand...
Close to 50%? WTF. I can live with 10 or even 20% because I reallllly need that money, but half? Jesus did not anticipate that..

Al Gorithm said:
Roll it over and forget about it. You've managed to survive this long without it , what's the difference? You'll get fucked in the ass on penalties and taxes too which you already know.

59.5 year old Ilovethis will be get a LOT more mileage out of that 7 grand than you will now.
Click to expand...
Yea my expenses are outrunning my income at the moment though. It would be a huge sign of relief to have a 7k monetary cushion.
 
You'll get hit with taxes and a penalty, so you're looking at maybe $4k from it. $700 immediate 10% penalty, and then taxes based on your tax bracket.

So, don't do it. Get another job.
 
IloveTHIS said:
Close to 50%? WTF. I can live with 10 or even 20% because I reallllly need that money, but half? Jesus did not anticipate that..

Yea my expenses are outrunning my income at the moment though. It would be a huge sign of relief to have a 7k monetary cushion.
Click to expand...

Would you have ended up on the street without the windfall? I realize its tempting , but this is the same type of thinking that everyone uses to justify not saving money. Don't look at it as 7k you won't have , think of it as trading 50k in future assets for 3500 dollars now......that's a terrible trade no matter how you look at it.
 
I have also been told 50% from accountants and wealth managers. It's a waste. Just forget about it.
 
Al Gorithm said:
Would you have ended up on the street without the windfall? I realize its tempting , but this is the same type of thinking that everyone uses to justify not saving money. Don't look at it as 7k you won't have , think of it as trading 50k in future assets for 3500 dollars now......that's a terrible trade no matter how you look at it.
Click to expand...
I'm living paycheck to paycheck and cant even use my credit card right now lol. The pressure is on to save every cent at the moment.

I have a significant amount in an investment portfolio. I havent touched it since I started it, and really dont want to. I like the idea of just being completely hands off with it and almost forgetting I even have it. I guess I have no choice but to withdraw some money from that in stead of this IRA.
 
10% Fed 2.5% CA (Varies by State) penalties plus your tax bracket. 50% is a high estimate but not that far out of range. Do not do it unless you are very desperate. Even if facing BK I would not do it, I believe that because your IRA/401(k) is an ERISA account it is protected against BK. Would not want to cash it out and then still claim BK. Had a client do this and they still filed for BK and now they owed the IRS for the distribution and now they have no retirement account. They did not call me ahead of time or seek legal advise. All for CC debt that probably could have been written off and not pay taxes on the COD as they were insolvent.
 
IloveTHIS said:
I'm living paycheck to paycheck and cant even use my credit card right now lol. The pressure is on to save every cent at the moment.

I have a significant amount in an investment portfolio. I havent touched it since I started it, and really dont want to. I like the idea of just being completely hands off with it and almost forgetting I even have it. I guess I have no choice but to withdraw some money from that in stead of this IRA.
Click to expand...

Obviously you gotta eat man , you're the only one that really knows how badly you need it. My only advice would be to remind you that sacrificing now will quite literally pay exponential dividends in the future.

Tomorrow will be today before you know it.
 
Al Gorithm said:
Obviously you gotta eat man , you're the only one that really knows how badly you need it. My only advice would be to remind you that sacrificing now will quite literally pay exponential dividends in the future.

Tomorrow will be today before you know it.
Click to expand...
Well said.
 
It's just under 50%. I have seen guys do it time and time again for much larger sums. In your case it's not that much anyway so would your future self pay your current self 3500 for 3500?
 
I would hit my actual savings before doing that. Are your savings in some kind of retirement fund, or is it just your savings account? If the latter, leave your retirement alone and find another option.
 
IloveTHIS said:
I have an old/forgotten savings IRA a family member started on my behalf a long time ago. I realized it the other day it has almost 7k in it and I could REALLY use that money. Yes I'm poor, fuck you.

So its my understanding withdrawing that money before I'm an old ass man can hit me with a 10% fee and state+federal taxes, but there are exceptions. I am moving into a new house, had a medical emergency within the last year+etc. Any bros ever done this and managed to get the fees waved? How long did it take to get your monies?

My actual savings are in another account I dont mess with but I sure as fuck want to cash this bitch out.
Click to expand...

Why are you moving into a new house if you have money problems?
 
Sounds like you have bigger fish to fry then worrying about taking money from your IRA. Like everyone mentioned don't do it. I think what you need is a game plan and possible find other avenues to temporarily and permanently generate more income if possible. We don't know your situation so my advice may be worthless, but good luck...
 
I have two IRA saving accounts that I am not touching until I'm in my 60's
 
ts.. you sound poor..

don't touch it.. you're fucking yourself if you use your retirement as a piggy bank
 
You must log in or register to reply here.

Latest posts

Forum statistics

Threads
1,237,018
Messages
55,461,349
Members
174,787
Latest member
Santos FC 1912

Share this page

Back
Top