Pulling money from an IRA for down payment on a house, what penalties are involved if we are both 65 and retir
Answers
2222 points
readytoretire answered 10 months ago …
As you are over 59 1/2, there is no 10% penalty for withdrawing the money. You will still owe income tax on the amount.
Read more from readytoretire
989 points
rvilmur answered 10 months ago …
There are no penalties except for the regular Federal Income tax on the withdrawn amount plus whatever your state taxing policy on IRA distributions is. So it is best to do this in a tax year where you expect to be in a lower tax bracket. The withdrawn money could push you into a higher tax bracket.
Read more from rvilmur
2775 points
Oldman answered 10 months ago …
rvilmur's answers are correct...and there's one more piece of info regarding taxes.. Let's assume that you are collecting Social Security payouts...the increased income from the IRA withdrawal makes your Federal Adjusted Gross Income significantly higher, can increase the tax basis of the zero & 5 % rates for investment income or gains, will makeTaxable Social Security proceeds appear higher, and it could push you up into a "High Income" bracket (approx. >$170,000) income bracket where your following year's Medicare B premiums would rise about 40-45$/mo/person (i.e., for this year Medicare B deductions from SSI are ca. $96, but at 170,000 AGI during last year, they rise to 134.00/per person, for this year). This isn't reason not to use some of the tax-sheltered money.. it's just other increased marginal taxes to be aware of.
Read more from Oldman
