traalfaz2[at]aol.com wrote:

- quote -

And to illustrate, client brought me a W2G form his wife had
"completely forgotten about" back in February. The added
2000$ income had the effect of increasing social security
taxable to the tune of (another) 1000$. Increase in tax,
750$.

ChEAr$,
Harlan Lunsford, EA n LA

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Sounds ok to me.

Remember that tax laws were written by different legislators
at different points in time under different economic
conditions and for different reasons. So, tax law as a
whole is not always consistent.

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Dan Bock wrote:

- quote -

Early distributions from IRAs have exceptions to the 10%
penalty that differ from the exceptions to early
distributions from retirement plans. You can avoid the early
withdrawal penalty if you roll over or transfer the plan
funds to an IRA and use the IRA distribution to pay for
qualified higher education expenses.

If I was sitting on a committee to simplify the tax code, I
would say that exceptions to the early withdrawal penalty
should be the same for all types of retirement plans.

--
Alan
http://taxtopics.net

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Dan Bock wrote:

- quote -

Thank you, Moderator. I will be happy to write to my
congresspersons but I thought I would post here first to see
if my understanding of the law was correct.

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- quote -

and even then not a lot gets done. A design feature of our
founders, a slowness to act built upon a bicameral
legislative branch in a two-party system in a tripartite
government.

fwiw, I don't much care one way or t'other about the
antitrust thingy, but I share your fetid view of Selig!

One tax issue a few senior citizens have rasied with me
regard gambling winnings/losses in that the increased income
raises taxable social sec. bene's while they may only deduct
the gaming loss and not that increase which was based solely
on those winnings claimed. I tell 'em stay out of the
casino, better to drive by and just throw the money at the
parking valet, same results.

Dave

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A.G. Kalman wrote:
- quote -

And since you brought it up, if I were sitting on such a
committee, I'd say there should be absolutely NO exceptions.

IOW, if you want to save for retirement, do so.
If you want to save to buy a house, do so.
If you want to save for college, then do so.

Of course I would also wipe out a whole bunch of deductions
and credits and have a much simpler 1040, a la 1972. Sure,
it would cut my income as a tax pro, but would also be
better for the country as a whole.

that'll be 3 cents, please.

ChEAr$,
Harlan Lunsford, EA n LA

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I am leaving my job this month to start grad school. I have
about $3000 in my employer's retirement plan and I might
want to use that money for tuition. However, if I just
withdraw the money from the retirement plan, I'll have to
pay a 10% penalty.

If I transfer the $3000 to a traditional IRA, then withdraw
it from the IRA when my tuition bill is due, do I avoid the
penalty?

(And if so, isn't that kind of silly? Shouldn't congress
change this law one way or the other?)

Moderator:
Congress should do a lot of things, but it takes writing
your Representative and your Senator to make them aware
of what should be changed. What if everyone who reads
this writes their Rep and their Senator about how unfair
the AMT is?

Better idea is to write them and tell them you think the
Commissioner of Baseball (Commissioner Kevorkian) is a
twit (which is a well-known fact) and they should repeal
Baseball's anti-trust exemption. Remember an anagram for
Bud Selig is I.B. Sludge. He is also referred to as
Bud Light. (Sorry for the off-topic comment but nothing
gets done unless you write or talk to your Congresscritter.)

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