<lkarwoski[at]comcast.net> wrote

- quote -

It would be ordinary income to her in the year(s) of withdrawal.

- quote -

The bank will issue a 1099R and she'll report the income on
Line 15 of Form 1040 (if here total income is sufficient).

--
Paul Thomas, CPA
paulthomascpapc[at]bellsouth.net

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<lkarwoski[at]comcast.net> wrote:

- quote -

Based on what you have said, a percentage of the funds in
this CD shopuld have been withdrawn and taxed each year
since your mother turned 70 1/2. Might want to look into the
details before the end of the year, since there is a penalty
for non withdrawl. If she has more than one IRA account the
funds could have been withdrawn from another account. Take
a look at her tax forms for 2004.

Anne

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lkarwoski[at]comcast.net wrote:

- quote -

The custodian (bank) issues a 1099 for the withdrawal. It gets
reported on the tax return as IRA distribution, line 11a,b of
the 1040A.

It is all taxed as it was per-tax money going in.

I would add, she should have been taking the RMD (required
minimum distribution) each year from her total IRA balance,
since turning 70-1/2. For this year, I believe* her RMD is
7.874% (or 1/12.7) of her 12/31/2004 balance.

Any RMD not taken is taxed at 50% of the ammount that should
have been withdrawn but wasn't. Ouch.

JOE

*pulled from Kiplinger web sight. IRS pubs should confirm.

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lkarwoski[at]comcast.net wrote:
- quote -

We first need to know whether or not she has been taking her
required annual withdrawals from the IRA.

Christmas Cheers,
Harlan Lunsford, EA n LA

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lkarwoski[at]comcast.net posted:

- quote -

It should be reported as ordinary income -- on whatever
line applies to IRA Distributions (15a &b for 2004 returns).

Bill

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lkarwoski[at]comcast.net wrote:

- quote -

Anything withdrawn from the IRA is probably fully taxable at
ordinary tax rates. If the amount is high enough, some or up
to 85% of her SS benefit may be taxable also.

A bigger problem may be that she has not been taking the
Required Minimum Distributions (mandatory after age 70-1/2 or
retirement, if later) each year. The penalty can be as much
as 50% of the amount that should have been withdrawn each
year plus accumulated interest. Ouch.


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<lkarwoski[at]comcast.net> wrote:

- quote -

It's all taxable as ordinary income.

- quote -

The IRA custodian will issue a 1099-R for the year of distribution,
which will guide her to line 15 of the 1040.

Before she takes the distribution she should estimate the tax effect.
Make sure to see if taxation of her Social Security benefit would be
affected. She can also specify what, if any, withholding she wants.

--
Phil Marti
Clarksburg, MD

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My elderly mother (age 88) has a conventional IRA account as
a bank CD. This account was rolled over many years ago from
a profit sharing plan funded 100% by her employer. What are
the income tax consequences of liquidating this account?
How would it be reported on her tax return?

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