Top Nine Facts about Taking Early Distributions -
Retirement Plans

1. Payments you receive from your Individual Retirement Account (IRA) before you reach age 59 1/2 are generally considered early or premature distributions.

2. Early distributions are usually subject to an "additional" 10% tax

3. Early distributions must also be reported to the IRS.

4. Distributions you rollover to another IRA or qualified retirement plan within 60 days are not subject to tax.

5. The amount you rollover is generally taxed when the new plan makes a distribution to you or your beneficiary.

6. If you made nondeductible contributions to an IRA and later take early distributions from your IRA, the portion of the distribution attributable to the nondeductible contributions is not taxed.

7. If you receive an early distribution from a Roth IRA, the distribution attributable to your prior contribution is not taxed.

8. If you received a distribution from any other qualified retirement plan, generally the entire distribution is taxable unless you made after-tax contributions to the plan.

9. There are several exceptions to the additional 10% early distribution penalty such as when the distributions are used for the purchase of a first home, certain medical or educational expenses, or if you are disabled.

Seven Important Facts about Claiming the First Homebuyers Credit

1. You must buy - or enter into a binding contract to buy your principal residence located in the US on or before April 30, 2010 and must close on the home or or before June 30, 2010.

2. To be considered a first-time homebuyer, you and your spouse, if married, must not have jointly or separately owned another principal residence during three (3) years prior to the date of purchase.

3. To be considered a long-time resident homebuyer you and your spouse, if married, must have lived in the same principal residence for any consecutive five-year period during the eight-year period that ended on the new home when purchased. and your settlement date must be after November 6, 2009.

4. The maximum credit for a first-time homebuyer is $8,000 and the maximum credit for a long-term resident homebuyer is $6,500.

5. You must file a "paper" return and attach Form 5405, First Time Homebuyer Credit & Repayment of the Credit Form plus additional documents to verify the purchase thereby if you claim the credit you will not be able to e-file.

6. New homebuyers must attach a copy of a properly executed settlement statement used to complete such a purchase, a copy of your latest bank statement reflecting you new address, copy of you drivers license with the new address show or various other documents. Buyers of a newly constructed home, where a settlement statement is not available, must attach a copy of the dated certificate of occupancy and purchasers of a mobile home must attached a copy of the retail sales contract.

7. If you are a long-time resident claiming the credit, the IRS recommends that you also attach any documentation covering the five-consecutive-year period, including Form 1098, Mortgage Interest Statement or substitute mortgage interest statements, property tax records or homeowner's insurance records.

So Much To Know
…about deductions from those listed.
That’s why we will talk about them in subsequent issues.
If you need additional information or answers to specific questions, we are as near as your phone, email OR drop by of our office.

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