The average IRA withdrawal last year was $8600.00...

[kentuck]

I was just attempting to do my taxes with TurboTax and that was one factoid that they had on their program. Mine was just a bit higher than average. Did anyone else have to take any money out of their IRA last year? If the average was 8600.00 and the penalty is 25% plus federal and state tax, it seems that someone is making a good bit of change off those suckers that have to take money out of their IRA to live on. Yeah, they got a break when they invested, mostly from their employers, but they sure as hell get it back if you have to withdraw any of the money.

[Inland]

1. Does that include non taxable w/drawals after age 59 1/2?

If so, in part it's going to include older people living off savings, maybe retired.

[HereSince1628]

4. No, that's people taking away from their retirement to survive

Thank goodness I'm now out of crisis and just into chronic trouble...two years ago I had to take out in order not to lose the farm.

[HereSince1628]

15. And on second thought isn't it interesting that $6K is close to the

national average for credit card debt?

Maybe I'm reading into this, but it seems likely that folks are tapping their retirement to be able to get out from under 18%-25% annual percentage rates.

[BrklynLiberal]

7. 59 1/2 is for ROTH IRAs only, not traditional IRAs

[mcscajun]

11. Not So. With traditional IRAs, 59 1/2 is the earliest you can withdraw

without penalty, and you MUST begin taking withdrawals at 70 1/2.

The distinction of a Roth IRA is that with a Roth, contributions do not reduce taxable income, so there's no deduction. However, the Roth is a tax-free account; no taxes are paid on the interest, dividends, or gains -- ever.

Traditional IRAs provided tax deductions, so all withdrawals are taxable, regardless of when they are taken. Withdrawals before age 59 1/2 are subject to penalty in addition to tax.

[BrklynLiberal]

13. You are right. Sorry. I misunderstood whatI read.

In a ROTH IRA, you pay the taxes on the income when you earn it, so you
don't have to pay the taxes when you withdraw it.

[petersjo02]

2. I took out about half that, maybe a little more...

Had to take it out to help cover my health insurance premiums (not yet eligible for Medicare, and COBRA ran out) which are $568/month. I don't know how I would have managed that expense without my IRA money. That's in addition to my husband's health ins expense of just over $200/month.

Edited to add additional costs for hubbie's insurance.

[leftofthedial]

3. I completely wiped out the last of my life savings over the last year

much more than the average.

[BrklynLiberal]

8. So did I. I have been unemployed for 5 years and totally wiped out y IRA

Still not working.
Am going to apply for food stamps, medicaid, and maybe even SSI.

My last job, in 2001, I was making $85,000 + benefits and perks. ;(

[lumberjack_jeff]

5. The early withdrawal penalty is supposed to be 10% n/t

[BrklynLiberal]

9. Plus taxes for a Traditional IRA..

[SeattleGirl]

6. I had to take some out of my account to stave off being taken

to court over a bill I had. It sucked the big one. Things still aren't going very well. I have hever had such a diffiult time financially.

[BrklynLiberal]

10. bankrate.com has a section on IRS rules for early IRA withdrawals

You can use google to find the differences between ROTH and traditonal IRAs.

[BrklynLiberal]

14. Comparison of ROTH IRA and Traditional IRA

http://br1.americanexpress.com/sif/cda/page/0,1641,14984,00.asp

[bemildred]

12. You can withdraw from 401k without penalty at 55 1/2.

From IRAs at 59 1/2

There are some special issues with the 401ks, but with the IRAs, once you 59 1/2 it's your money, you just pay ordinary income tax on it.

[Catshrink]

16. I had to 3 years ago when I did my student teaching...

had no other means of income. I'm glad I had it to draw on -- but I think I only withdrew about $5000. I tapped it 7 years ago for the down payment on my house -- the down payment was made up of 401(k) and the sale of Beanie Babies. I was amazed that someone paid $400 for a stupid bear I'd paid $5 for. Whatever -- the BBs paid for the house.