SEP IRA

Archive for the ‘SIMPLE IRA Withdrawals’ Category

Question: i requested an inservice withdrawal from my SIMPLE IRA and was told that it is not allowed, is this correct?

Answer: Read your plan document. A SIMPLE should be covered by the same withdrawal rules as an IRA: withdrawals constitute taxable income (ordinary income); 10% penalty if withdrawn before 59-1/2 (25% if in the the first 2 yrs of the plan); money must be in SIMPLE for 2 years before you can roll to an IRA.

There are some special withdrawals allowed for SIMPLEs:
- for medical expenses
-to buy a first house
- if you are completely disabled
- to purchase health insurance
- to pay for college expenses

So the withdrawals should be allowed, providing the money has been in the plan for at least 2 yrs.

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Question: Retirement fund questions? To withdrawal or not…SIMPLE IRA?

I had a SIMPLE IRA with a local company from here in Michigan from a job I had a few years ago. Going through year end tax info. Totally forgot about it. Anyway….beginning of ‘08 it was worth 9600 and at the end of the year it’s now worth 5800. I ahve a few questions. (1) don’t you think my investment pro would have called or made some changes? (2) can i claim any of these losses on taxes (3) I am considering pulling the little that is left out and paying off a vehcile and a trailer? I’m certainly upset but shame on me. I am enrolled in my new companies retirement fund…let me know what you all think!
The investment representative made the decisions on where to invest the money…it is what it is…does 30% seem like a lot to lose during this time period of six months to eight months?

Answer: In this market that is no more than about average to loose. If you pull the money out you will have to pay a penalty of 10% plus taxes. Many mutual funds are down over 50%. There are no losses to claim since you did not pay taxes on the money to begin with. What is your interest rate on car and trailer? It is probably not high enough to offset the tax bill you would be shackled with.

Almost every investment adviser would advise to stand pat or to roll the money into your own IRA account with a reputable Mutual Fund company. Whether that advice would be good or not I do not know, but that is what I would recommend.

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