Obama – allow withdrawl 15% of IRA w/o penalty?

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L1: Obama – allow withdrawl 15% of IRA w/o penalty?I heard Obama mention this once or twice during the election. Wonder if it will be in his stimulus plan? (Sorry to be off topic) 2008-11-24 15:42, By: BOB_85364, IP: [98.145.25.44]
L2: Obama – allow withdrawl 15% of IRA w/o penalty?If it is part of Obama’s stimulus or “public bailout” plan, he will not be President until 2009.However, there are various discussions or ideas being circulated about 2008, if Congress does anything before going home — not that they have done much the last 8 years while they were in session !!!2008-11-24 17:00, By: dlzallestaxes, IP: [96.245.168.66]

L2: Obama – allow withdrawl 15% of IRA w/o penalty?I believe the plan being floated had a cap on the amount that could be withdrawn as well as a percentage limit. But this is not totally off topic re 72t plans.If this gets passed, it could have a minor affect on implementing 72t plans. The penalty free withdrawal might be enough along with other income to push off the start of a 72t plan for another year. Also, if a taxpayer has a 72t plan and also a separate IRA outside the plan, if more funding was needed, the non 72t IRA could be tapped without penalty rather than providing protection for the 72t at the cost of the penalty on the non 72t distribution.2008-11-24 19:56, By: Alan S., IP: [24.116.165.60]

L2: Obama – allow withdrawl 15% of IRA w/o penalty?The best “stimulus plan” as it deals with 72(t) would be to suspend the Required Minimum Distribution (RMD) requirements for 2008 through 2010. Also, for anyone who has already made their RMD for 2008, give them the option to put it back into their IRA / K-plan, etc., without any restrictions through October 15, 2009.I deal with a lot of seniors and beneficiaries of inherrited IRA’s who are forced to take their RMD each year, and they really don’t need the money and would rather leave it invested.AARP and another organization that I can’t think of right now have been pushing this concept. So if you are talking with your elected representatives over Thanksgiving, you might want to float this concept with them.Regardless of which “side of the isle” might push this or the other concept in the original post, expect the lawmakers to not exactly get it right the first time. They have a nack for leaving something out or not thinking it through completely, and then having to come back later to “fix it.” Why do we have so many “Omnibus Reconcilliation Act of (you fill in the year)?” The whole purpose of this type of legislation is to fix what they previously screwed up.Jim2008-11-25 07:22, By: Jim, IP: [70.167.81.119]

L2: Obama – allow withdrawl 15% of IRA w/o penalty?Jim… You have a good idea, butI have to disagree in terms of a stimulus plan.Waiving the required minimum distributions is a great idea as it would give individuals a chance to let the market recover before withdrawing assets at a loss.However, since it really doesn’t involve any spending or cash flow, it would do little to act as a stimulus.I like the losing party’splan that would have allowed withdrawing up to 100k tax free from your IRA – that would be a stimulus as much of it would probably end up in the economy.At any rate, I don’t think either plan will be implemented – the treasury wants their revenue and either plan would reduce that revenue.Just my thoughts.2008-11-25 07:38, By: Gfw, IP: [216.80.125.206]

L2: Obama – allow withdrawl 15% of IRA w/o penalty?Good morning Gordon:You’re right that suspending RMD’s for a time would not stimulate spending or tax collecting right now, but it would stimulate confidence, something the entire world could use right now. I believe people would be more “confident” if not forced to distribute their retirement fundsat a significant loss, rather let things sit and hopefully in the not too distant futuresee some recovery.Politicians and others complain about the low savings rate in The US, whichI attribute to two changes in the law. Do you remember when you couldreduce from your taxable incomethe first $100 ofinterest from your savings accounts? And, do you remember when you could put the maximum amountinto your IRA regardless of how much money you made or whether you had any other retirement plan at work? You can trace our reduced savings rate directly to these two events. Of course there are other reasons, but I remember how politicians of the day began complaining about the reduced savings rate within a very short time after the law changed affecting these two concepts, and that was quite some time ago.Think they’ll ever learn?Jim2008-11-25 07:58, By: Jim, IP: [70.167.81.119]

L2: Obama – allow withdrawl 15% of IRA w/o penalty?I have suggested 3 ways that would stimulate the economy, and savings if applicable.1. REINVESTED DIVIDENDS in non-retirement accounts should not be subject to tax until ultimately sold. At time of sale they would have a -0- cost basis. ( If this sounds familiar to other “old timers”, this approach was used in the early 1980s whereby Electric Utility reinvested dividends were excluded from taxation for the first$ 750 per person/ $ 1,500 per couple, and then taxed when sold with a -0- basis, if anyone besides me remembered that aspect of the regulation.) By the way, this idea has been proposed several times in Congress, but has never passed YET !!! The advantage of this approach is that it avoids taxpayers having to spend cash that they did not receive because the Dividends were Reinvested.2. Adjust the Federal Withholding Tables NOW. The average federal refund is about $ 2,800 because these tables are skewed against the taxpayers who thereby give interest-free loans to the government.3. Have a 1 month moratorium on SS/Medicare payroll taxes. This will benefit lower wage earners. High wage earners will be already over the limits anyway, or go over the limit later than usual, but before 12/31. Self-employeds would reduce their next estimated payment by 1/3 ( i.e. equal to one month out of the 3 in a payroll quarter.2008-11-25 10:38, By: dlzallestaxes, IP: [96.245.168.66]

L2: Obama – allow withdrawl 15% of IRA w/o penalty?I was able to use the penalty free option after Hurricane Rita. I took out $100k penalty free and used the 3 year income average option. It was a life saver. I only claimed $33k each year, this being the last year. Since I retired at 50, I have always had a burr under my saddle that I worked and saved all my life and the gubmint tells me I can’t have my own money without a penalty. The tax is deffered and I’m willing to pay it, but a penalty? Give me a break. If they had provided the money, that might be different.2008-11-25 12:19, By: chuckles, IP: [70.135.3.113]

L2: Obama – allow withdrawl 15% of IRA w/o penalty?Chuckles:Glad to hear that the money situation worked out for you after the hurricane.Unfortunately, gubment (love that word!) is loaded with folks who actually believe that ALL US currency is the property of the US gubment… with a bit left over to pass along to theirbuddies in state and local gubments. It is merely on loan to the restof us who worked for and earned it. :-/I agree with your sentiments on “early withdrawal” penalties. In my opinion, this is nothing more than nanny state politics inserting itself into our private financial business.Ed2008-11-26 11:22, By: Ed_B, IP: [67.160.169.105]

L2: Obama – allow withdrawl 15% of IRA w/o penalty?Lots of good ideas being floated around in here on possible changes to the current tax laws as regards 72t plans.My thought on this is that many in government have spoken to the need for US citizens to save more for retirement. To help achieve this, we have a number of tax sheltered plans, such as 401k, 403b, 457, 529 (for college), and both TIRA and Roth IRAs. While these are good and very helpful to many of us saving for retirement, something that would be of GREAT help would be if the long term capital gains in these plans were actually taxed upon withdrawal as such (which they are) and not as income (which they are not). The current taxation method looks very much like another example of government giving with one hand while taking back with the other. It surprises me that more people in retirementand those nearing it are not clamoring for this much needed and perfectly justified change in the taxlaws.Ed 2008-11-26 11:29, By: Ed_B, IP: [67.160.169.105]

L2: Obama – allow withdrawl 15% of IRA w/o penalty?Good point Ed! Lets say I work hard, save my money, invest wisely, and retire with $1mill in an IRA. Then through deft money management and some luck, I manage to parlay that million into $500k. When I start to take out my money, they tax it at income levels even though I’m dying and may have to go back to work. That’s pretty much what happened to me. I had a taxable account and an IRA and parlayed my taxable account to zero in 6 years. I will be taking the losses off my taxes at $3000 per year until I’m 150. So now, I have to tap my IRA which has also been decimated and get charged income rates. I think the answer is to win the lottery. Otherwise, keep working. I’m writing my congressman to try to get the capital loss limit raised from $3000 a year. If anyone else is interested, maybe a letter to yours would help. I’m sure I’m not the only one that lost money. I lost about 1/3 in the dot com bust, and now about 40% of what was left in the housing bust. If the loss limit was raised to say $10k-$25k, I would be able to withdraw a larger amount and work a little more and still pay smaller tax amounts.2008-11-26 12:38, By: chuckles, IP: [70.135.3.113]

L2: Obama – allow withdrawl 15% of IRA w/o penalty?Thanks for the kind words, Chuckles.I agree that the law is in serious need of change. Unfortunately, as soon as anyone mentions this, people start falling all over themselves gasping out “how will we pay for this?”. Funny… I don’t recall ANY of them EVER worrying about how the taxpayers are going to afford higher taxes. As if feeding 25% of the national GNP into the maw of government somehow made ANY sense whatever. As my son likes to say, “In ancient Egypt, Pharaoh was a slave driving absolute dictator… and even he only taxed his subjects at 1 part in 5”. Such progress wehave now.Ed 2008-11-28 21:25, By: Ed_B, IP: [67.160.169.105]

L3: Obama – allow withdrawl 15% of IRA w/o penalty?I have been looking all over for any news regarding the 10% penalty free IRA withdrawal that Obama said he would like to do for 08-09. I would like to defer doing a 72t for this year if possible. After the October announcement, I have heard nothing. Now that he has signed the stimulus package, still nothing. I may be wrong, but anyone have any current information regarding this?2009-02-18 20:56, By: dihanna, IP: [69.209.195.125]