I rolled over an IRA indirectly into a pension plan to buy retirement time. Because it was indirect the retirement fund called it post tax & taxable. The IRS has sent me a bill for early withdrawal. Any ideas?
Answer :
An indirect rollover has more regulations, because the money goes through you, the IRA owner. Moving assets from one qualified retirement plan to another can be done either through a transfer or rollover. Indirect rollovers, where a check is sent to the IRA owner, tend to be faster but have more risk of being assessed penalties if the IRA owner does not satisfy the requirements in a proper or timely fashion. The IRS provides an IRA owner a 60-day window to complete an indirect rollover. If the rollover is not completed within this time frame, the IRS treats the rollover as a complete distribution. As such, the entire balance of the IRA is added to ordinary income. As long as you are under age 59 ½, there is also a 10 percent tax penalty assessed on the assets. The 60 days starts the day you receive the distribution from the existing IRA custodian. The 10% additional tax on early withdrawals from an IRA would not be a deductible expense because it is a federal tax.
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