Cash Withdrawn from Account
Hi,
I recently discovered a substantial amount sitting in a cash account of a fund that I have. It has been withdrawn. The money was an accumulation of dividends and capital gains (2016-2018) for which taxes were paid. Will income tax have to be paid on the withdrawn proceeds. Next to no interest was earned on this money.
Terry Says
What do you mean by “it was withdrawn”? And was this a regular brokerage account or was it an IRA?
If it was a regular brokerage account, you paid taxes on dividends each year as you received the money — even if it was left sitting in your account. You would have received a 1099 form and added the income to your taxes.
But if YOU withdrew it from an IRA, yes you would have to pay ordinary income taxes on the withdrawal. AND, if you’re under age 59-12, you’d owe a 10% early withdrawal penalty.
So it really matters what kind of account, your age, and your tax status. Ask your accountant how to handle this, depending on your situation.
