[SweetShot]

Darn it all to get out.
Ya'll know the story about my Mother and the total betrayal of her and my siblings all because of money.
My Dad had passed away 4 months before Mother came back into my life after 40 yrs of bliss w/o her. Daddy left me an inheritance that was a 401 K that was NOT avail to me till I was 62. $40K.....and it was in stocks with Edward Jones...in '08 I lost $10K in the crash, so I took the money out and put it into a CD where it still is. I took the penalty for withdrawal and knew there was a raise in tax bracket, but never heard anything more. Did my taxes and got money back the last 2 yrs.

WELL......got a fat, thick letter from the IRS on Friday.
Seems they are saying that I did NOT pay taxes on the money, and even tho it was done in '08, I have till May 15th to pay $7,529.07 and penalities.
Isn't that nice of them to give me less than 3 weeks?

Needless to say I just don't happen to have that kind of money sitting around. Also, my CD is coming due for renewal today (weird timing huh?), so I will have to pull the money out of that and reduce what little there is left, and curtail the things I wanted to do this summer, cause I am now officially broke.

Darn it, really wanted to see ya'll this summer. Will have to stick to local things cause just cannot afford out of town stuff.
But I KNOW there will be pictures!!! And lots of them!!!!

Take care and drive safe, have a great time and WASTE THAT GAS!
hugs...rach :waving:

 

[FLASHED]

Sorry to hear you wont be able to make it ,better luck next year .

 

[1BLACKHARLEY]

Have you checked with your tax guy? If it took a 10k dump, then they taxed you at what appears to be 18+%, there might be a deduction to counter a certain percentage.... I would never take the I.R.S.'S word for it. The are like a casino, and come up with a formula that favors them without knowing all your details. Maybe you bought a house, or had exhorbant mediacl bills. I would cut a check till I had somebody check it out....

 

[Andy69]

$7500 sounds about right.

10% of $30k is $3k plus $4.5k if you're in the 15% tax bracket. Check your '08 return carefully. You should have filled out a form 5329 (I think) and also entered the distribution amount as taxable income on your form 1040. You also would have probably had to write them a pretty substantial check.

Now here is where I'm pretty hazy on the subject of taxing a 401k distribution. The reason it's taxed as income when you withdraw is because you get a tax deduction on the money you put in and the gains are tax deferred, meaning you only get taxed on them when you withdraw. Since this was an inheritance and not YOUR 401k, the rules might be different, because you didn't put the money in. It may very well be that your basis for calculating taxes is the value of the 401k account when you took possession. I am reasonably sure that you as the inheritor DO NOT have to pay the 10% penalty for early withdrawal. You need to talk to an accountant or tax attorney, pronto.

I'm a little confused as to why you took the money out. Surely your rep at Edward Jones told you that was a very very bad idea. If he didn't he was an idiot and deserves a good stiff kick in the 'nads. 401k plans almost always have some kind of money market fund that you could have dumped it in that would pay at least as well as that CD and you wouldn't have had to pay the taxes on the distribution.

 

[LeoP]

If you can find the paperwork(I truly hope you can)if you do your own taxes, do an amended return, pay what you figure it out to be and ask that the penalty be erased. We had to do an amended return, paid the amount owed and asked that the penalty be forgiven and never heard another work. Give it a try.

 

[Dean]

How about Income averaging?

 

[Ethan1]

I'm sorry to hear about your troubles, Rachael.:sad:

 

[LeoP]

How about Income averaging?

I think that is no longer available. ?????

 

[blm]

Rachael: Sorry to hear of your financial woes. I don't know if this is appropriate or not but I have to confess something to you. I have fantasies involving Buttercup
Wow I feel much better getting that off my chest. She is one hot gal!!!!!:yes: