Inherited IRA
Hi,
I have a young client who lost her husband in 2008. Without receiving tax advice, she rolled her husbands IRA into her own name. Then she took a $40,000 distribution in 2008 to pay off her bills. She has 2 children, difficult financial situation, etc. Can we avoid the early withrawal penalty from the IRA somehow?
Thank you,
Suzanne White
Permalink Submitted by Alan Spross on Fri, 2009-02-06 22:14
Sorry, but don’t see how. If she intended to roll it over and forgot, the IRS has extended the 60 day period for rollovers in many cases, but when the funds are needed for current expenses, there was obviously no rollover intent.
The only relief would be if any of the expenses qualified for the penalty waiver, eg certain medical or insurance costs, higher education etc.
Sadly, many people in her situation seem prone to make these transactions without checking first.
She should check to see if he had any basis in his IRA, which would reduce both the tax and penalty on her distributions.