Take Money Out of Your IRA at Any Age Penalty-Free

You probably think you can’t take money out of your IRAs before age 59 1/2 unless you meet a narrow exception to the unpleasant 10 percent penalty on early distributions. But that’s not true. We have a variety of planning opportunities here.

For example, you don’t pay taxes or the 10 percent penalty on amounts you withdraw that you previously contributed or converted to the Roth IRA. These amounts are your “basis” in the Roth IRA. (Remember, you funded your Roth IRA with after-tax money!)

The law says Roth distributions come out in the following order:

  • regular contributions,
  • rollover contributions, and finally
  • earnings.

Example. Jane opened her Roth IRA in 2002. She contributed $30,000 over the life of the Roth IRA. Today, the account is worth $50,000. Jane can withdraw up to $30,000 tax-free and penalty-free regardless of her age.

If you made nondeductible contributions to a traditional IRA, then you have “basis” in all your traditional IRAs. With basis, you have some planning opportunities with your business’s qualified plans, such as your 401(k).

And then, on a totally different front, there’s a little-known escape from the 10 percent penalty, called the substantially equal periodic payment exception. It allows you to create a stream of penalty-free traditional IRA distributions starting at any age for any reason.

You have to continue the substantially equal periodic payments for at least five years or until you reach age 59 1/2, whichever is later. As you can see from the above, you can touch your IRA accounts before age 59 1/2 without a special reason.

Home Office Deduction

Home Office DeductionWith a growing number of business owners now working from home, many may qualify for the home office deduction, also known as the deduction for business use of a home. Usually, a business owner must use a room or other identifiable portion of the...

Health Savings Accounts: The Ultimate Retirement Account

Health Savings Accounts: The Ultimate Retirement Account Looking to save for retirement? The first account you should open and fund is not an IRA (regular or Roth) or 401(k). If you qualify, your first retirement account should be a Health Savings Account (HSA). Don’t...

Do you need more 2020 tax deductions?

Do you need more 2020 tax deductions?

2021 Last Min – Year End Retirement Deductions

2021 Last-Minute Year-End Retirement Deductions
The clock continues to tick. Your retirement is one year closer.
You have time before December 31 to take steps that will help you fund the retirement you desire.
Take a few minutes to review the four retirement plan tax-reduction strategies in this article.
You might find several thousand dollars (and maybe much more) in your pocket by taking the actions in this article. But you’ll need to act now to get the cash.

Last Minute 2020 Biz Deductions

The purpose of this post is to get the IRS to owe you money.

Of course, the IRS is not likely to cut you a check for this money (although in the right circumstances, that will happen), but you’ll realize the cash when you pay less in taxes.
Here are seven powerful business tax deduction strategies that you can easily understand and implement before the end of 2020.

Year End Medical Plan Strategies

Here are the six opportunities for you to consider for your business’s Year End Medical Plan Strategies.

Want to know more?  Have some tax questions of your own?  Get in touch with us and we’ll guide you thru the tax and accounting process.

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Home Office Deduction

Home Office DeductionWith a growing number of business owners now working from home, many may qualify for the home office deduction, also known as the deduction for business use of a home. Usually, a business owner must use a room or other identifiable portion of the...

Is a Property Fix-up and Sale an Investor or a Dealer Property?

Is a Property Fix-up and Sale an Investor or a Dealer Property? Background I’m an independent computer consultant who nets $100,000 from my proprietorship. I bought a house in March 2019, fixed it up, and sold it in April 2020 at a net profit of $85,000. I bought...

Health Savings Accounts: The Ultimate Retirement Account

Health Savings Accounts: The Ultimate Retirement Account Looking to save for retirement? The first account you should open and fund is not an IRA (regular or Roth) or 401(k). If you qualify, your first retirement account should be a Health Savings Account (HSA). Don’t...

Tax Implications of Investing in Precious Metal Assets

These days, some IRA owners and investors may be worried about being overexposed to equities. That could be you.
But the safest fixed income investments (CDs, Treasuries, and money-market funds) are still paying microscopic interest rates.
For example, when this was written, the 10-year Treasury was yielding about 1.92 percent. Ugh!
Meanwhile, the pandemic might or might not be coming to an end, the economy might or might not be okay, and inflation might or might not be controlled. Who knows?
In this uncertain environment, investing some of your IRA money in gold or other precious metals such as silver and platinum may be worth considering. Ditto for holding some precious metal assets in taxable form. This article explains the federal income tax implications. Here goes.

The Mom and Dad Hotel

Mom and Dad can rent out a room in their home or rent their entire house (tax-free) if they rent it out for no more than 14 days during the year. While the rules are generous in allowing your parents not to include this rental income as taxable income, they can’t offset that income with expenses associated with the rental.

QSEHRA and HRA

Have you established a 105-HRA, Qualified Small Employer Health Reimbursement Arrangement (QSEHRA), or Individual Coverage Health Reimbursement Arrangement (ICHRA) to reimburse your employees for medical expenses?