IRS penalty on retirement withdrawal
My husband received a letter from the IRS stating that he didn’t claim the money that he took out of his retirement account. He’s going to be 70 years old and he doesn’t always think about all of it. So, I don’t know if he got a statement or not. He took out $20,000 to buy a car. The IRS charged him $5000+ to pay back. Is there something for seniors to do to get some kind of break or something because of his age? Is there something we can do to reduce the amount or is there nothing at all we can do about it? I noticed it states that it has to be paid by December 23rd or there will be an additional charge! Thank You so very much for your advice in advance.
Terry Says
There is no penalty after age 59-1/2 for IRA withdrawals. BUT taxes must be paid on that money as if it were additional ordinary income. Since you are likely in the 25% marginal tax bracket, you owe them $5,000. Send a check IMMEDIATELY, and a letter apologizing that it was a one-time event and slipped your attention when you filed your tax return last year!
