removeps-groups[at]yahoo.com wrote:
- quote -

How is failing to qualify for a special benefit the same thing as a penalty?

By that same logic, anyone who sells capital assets at a gain instead of
letting their heirs get a stepped up basis is penalized. Anyone who
works full time instead of getting unemployment comp, Earned Income
Credit, etc. is penalized. Anyone choosing not to get married or have
children is penalized compared to someone with otherwise identical income.

The penalty that really galls me is every week that goes by without me
winning the lottery...

-Mark Bole

--
<< ------------------------------------------------------- > << The foregoing was not intended or written to be used, > << nor can it used, for the purpose of avoiding penalties > << that may be imposed upon the taxpayer. > << > << The Charter and the Guidelines for submitting posts > << to this newsgroup as well as our anti-spamming policy > << are at www.asktax.org. > << Copyright (2007) - All rights reserved. > << ------------------------------------------------------- >

On Nov 9, 5:27 pm, Mark Bole <ma...[at]pacbell.net> wrote:
- quote -

Not quite, because if he waited an additional 2 or so years (I forget
the numbers in the original post), there wouldn't be any tax due at
all. So the fact that there is tax due because the 5 years are up
strikes me as a kind of penalty.

--
<< ------------------------------------------------------- > << The foregoing was not intended or written to be used, > << nor can it used, for the purpose of avoiding penalties > << that may be imposed upon the taxpayer. > << > << The Charter and the Guidelines for submitting posts > << to this newsgroup as well as our anti-spamming policy > << are at www.asktax.org. > << Copyright (2007) - All rights reserved. > << ------------------------------------------------------- >

removeps-groups[at]yahoo.com wrote:
- quote -

Only if one thinks of ordinary income tax, say on earnings from a
savings account, as a penalty.

-Mark Bole

--
<< ------------------------------------------------------- > << The foregoing was not intended or written to be used, > << nor can it used, for the purpose of avoiding penalties > << that may be imposed upon the taxpayer. > << > << The Charter and the Guidelines for submitting posts > << to this newsgroup as well as our anti-spamming policy > << are at www.asktax.org. > << Copyright (2007) - All rights reserved. > << ------------------------------------------------------- >

On Nov 9, 10:50�am, "removeps-gro...[at]yahoo.com" <removeps-
gro...[at]yahoo.com> wrote:
- quote -

The "usual 10% penalty" is not really a penalty, but rather a SURTAX
added to the ordinary taxation of the funds because of early
withdrawal.

--
<< ------------------------------------------------------- > << The foregoing was not intended or written to be used, > << nor can it used, for the purpose of avoiding penalties > << that may be imposed upon the taxpayer. > << > << The Charter and the Guidelines for submitting posts > << to this newsgroup as well as our anti-spamming policy > << are at www.asktax.org. > << Copyright (2007) - All rights reserved. > << ------------------------------------------------------- >

On Nov 2, 1:24 am, Herb Smith <smithf...[at]aol.com> wrote:

- quote -

One may think of this as a form of penalty (different from the usual
10% penalty).

--
<< ------------------------------------------------------- > << The foregoing was not intended or written to be used, > << nor can it used, for the purpose of avoiding penalties > << that may be imposed upon the taxpayer. > << > << The Charter and the Guidelines for submitting posts > << to this newsgroup as well as our anti-spamming policy > << are at www.asktax.org. > << Copyright (2007) - All rights reserved. > << ------------------------------------------------------- >

On Nov 1, 12:02�pm, ddl[at]danlan.*com (Dan Lanciani) wrote:
- quote -

No, actually just the opposite effect. The five year conversion
holding period ceases to have any effect once you turn 59-1/2. The
"basic" Roth holding period applies at any age, even after you turn
59-1/2. If you open a Roth IRA after age 59-1/2 you must still wait 5
tax years to get tax free earnings



- quote -

No penalty, no tax on contributions, but the earnings are still
subject to ordinary income tax until the year you turn 63.

--
<< ------------------------------------------------------- > << The foregoing was not intended or written to be used, > << nor can it used, for the purpose of avoiding penalties > << that may be imposed upon the taxpayer. > << > << The Charter and the Guidelines for submitting posts > << to this newsgroup as well as our anti-spamming policy > << are at www.asktax.org. > << Copyright (2007) - All rights reserved. > << ------------------------------------------------------- >

In article <geidcj$o3v$1[at]registered.motzarella.org> , JoeTaxpayer[at]comcast.net (JoeTaxpayer) writes:
|
|
| Dan Lanciani wrote:
| > Open first/only Roth at age 58 and contribute.
| > Withdraw everything including earnings at age 60.
| > Is there a penalty?
|
| No, but what have you gained?

I wasn't thinking so much of planning to do that as of not having to
worry about a potential downside (i.e., if you needed the money in an
emergency) when starting/contributing late.

Dan Lanciani
ddl[at]danlan.*com

--
<< ------------------------------------------------------- > << The foregoing was not intended or written to be used, > << nor can it used, for the purpose of avoiding penalties > << that may be imposed upon the taxpayer. > << > << The Charter and the Guidelines for submitting posts > << to this newsgroup as well as our anti-spamming policy > << are at www.asktax.org. > << Copyright (2007) - All rights reserved. > << ------------------------------------------------------- >

Phil Marti wrote:

- quote -

Pub 590 confirms Phil's correction to my response. After 59-1/2, no
penalty, but the Roth still was subject to the 5 yr rule regardless of
the age of the withdrawant.

Joe
(sitting here corrected)

--
<< ------------------------------------------------------- > << The foregoing was not intended or written to be used, > << nor can it used, for the purpose of avoiding penalties > << that may be imposed upon the taxpayer. > << > << The Charter and the Guidelines for submitting posts > << to this newsgroup as well as our anti-spamming policy > << are at www.asktax.org. > << Copyright (2007) - All rights reserved. > << ------------------------------------------------------- >

"JoeTaxpayer" wrote:

- quote -

There is no tax-free growth in this scenario. The distribution will not be
"qualified," thus the earnings will be taxable. But no premature
distribution penalty since you're over 59 1/2.

--
Phil Marti
Clarksburg, MD

--
<< ------------------------------------------------------- > << The foregoing was not intended or written to be used, > << nor can it used, for the purpose of avoiding penalties > << that may be imposed upon the taxpayer. > << > << The Charter and the Guidelines for submitting posts > << to this newsgroup as well as our anti-spamming policy > << are at www.asktax.org. > << Copyright (2007) - All rights reserved. > << ------------------------------------------------------- >

Dan Lanciani wrote:
- quote -


ChEAr$,
Harlan Lunsford, EA n LA

--
<< ------------------------------------------------------- > << The foregoing was not intended or written to be used, > << nor can it used, for the purpose of avoiding penalties > << that may be imposed upon the taxpayer. > << > << The Charter and the Guidelines for submitting posts > << to this newsgroup as well as our anti-spamming policy > << are at www.asktax.org. > << Copyright (2007) - All rights reserved. > << ------------------------------------------------------- >

Dan Lanciani wrote:
- quote -

No, but what have you gained? 2 yrs tax free return of the growth. The
initial deposit was always available for you to withdraw penalty free
anyway.
Joe

--
<< ------------------------------------------------------- > << The foregoing was not intended or written to be used, > << nor can it used, for the purpose of avoiding penalties > << that may be imposed upon the taxpayer. > << > << The Charter and the Guidelines for submitting posts > << to this newsgroup as well as our anti-spamming policy > << are at www.asktax.org. > << Copyright (2007) - All rights reserved. > << ------------------------------------------------------- >

In article <dU0Pk.1928$Jv2.977[at]nwrddc01.gnilink.net> , prm20871[at]verizon.net (Phil Marti) writes:
| "dpb" wrote:
|
| > IE, question I'm trying to answer is -- if over 60 and were to roll over a
| > traditional IRA (paying tax on the value, of course) is the 5-yr rule null
| > and void for further distribution or not?
|
| Once you reach 59 1/2 the premature distribution penalty will NEVER apply to
| you, no matter what you do. Don't waste time trying to figure out why IRS
| used a particular word in a particular sentence. It'll drive you nuts.

Does this mean that the basic 5 year rule (not the conversion clock)
has no effect? Example:

Open first/only Roth at age 58 and contribute.
Withdraw everything including earnings at age 60.
Is there a penalty?

Dan Lanciani
ddl[at]danlan.*com

--
<< ------------------------------------------------------- > << The foregoing was not intended or written to be used, > << nor can it used, for the purpose of avoiding penalties > << that may be imposed upon the taxpayer. > << > << The Charter and the Guidelines for submitting posts > << to this newsgroup as well as our anti-spamming policy > << are at www.asktax.org. > << Copyright (2007) - All rights reserved. > << ------------------------------------------------------- >

"dpb" wrote:

- quote -

Once you reach 59 1/2 the premature distribution penalty will NEVER apply to
you, no matter what you do. Don't waste time trying to figure out why IRS
used a particular word in a particular sentence. It'll drive you nuts.

--
Phil Marti
Clarksburg, MD

--
<< ------------------------------------------------------- > << The foregoing was not intended or written to be used, > << nor can it used, for the purpose of avoiding penalties > << that may be imposed upon the taxpayer. > << > << The Charter and the Guidelines for submitting posts > << to this newsgroup as well as our anti-spamming policy > << are at www.asktax.org. > << Copyright (2007) - All rights reserved. > << ------------------------------------------------------- >

Pub 590 Chap 2 has the following;

- quote -

Question: What triggers the "may not" as opposed "will or do not"?

IE, question I'm trying to answer is -- if over 60 and were to roll over
a traditional IRA (paying tax on the value, of course) is the 5-yr rule
null and void for further distribution or not?

Sounds like "maybe, but then again, maybe not" from the above and could
find no clarification of why "may" is in the above wording.

--

--
<< ------------------------------------------------------- > << The foregoing was not intended or written to be used, > << nor can it used, for the purpose of avoiding penalties > << that may be imposed upon the taxpayer. > << > << The Charter and the Guidelines for submitting posts > << to this newsgroup as well as our anti-spamming policy > << are at www.asktax.org. > << Copyright (2007) - All rights reserved. > << ------------------------------------------------------- >