SEP IRA

Archive for the ‘SIMPLE IRA Withdrawals’ Category

Question: Questions about SIMPLE plan. Which of the following statements is/ are correct?

Taylor, age 25, works for Pbay. Pbay adopted a SIMPLE plan 6 months ago. Taylor made an elective deferral Contribution to the plan of $8k and Pbay made a matching Contribution of $2.4K. Which of the following statements is/are correct?
1.Taylor can withdraw his entire account balance without terminating employment,
2.Taylor can roll his SIMPLE IRA into his Traditional IRA
3.Taylor will be subject to ordinary income taxes on withdrawals from the SIMPLE.
4.Taylor will be subject to a 25% early withdrawal penalty on amounts withdrawn from the SIMPLE.

a.1 and 2
b.1 and 3
c. 2,3, and 4
d. 1,3 and 4

thank you very much!!!!!
i think the answer is d too

Answer: I too think its B. To get a better answer visit

http://www.missouribusiness.net/irs/sections/section11/simplefaqs.htm#15

Question: Can anyone tell me the penalty for early withdrawal from a SIMPLE IRA?

Any information will help, I need to know how it will effect me when I file my taxes and what all the penaltys are.

Answer: Don’t do it if you can avoid it.

You must pay the taxes as if it was taxable when you made the Contribution, PLUS a 10% penalty on top of that. E.g. if that money would have been in the 28% bracket, you will be paying 38% on your money.

There are a few reasons you can take money out (hardship, etc.) that avoid the penalty, but you must still pay the taxes.

Rule#1: Develop a Workable Plan