cpa's
 

My brother-in-law has a question. He cashed in a Roth IRA after a lay off and used the money to live on.
Now he gets gigged for income tax on the whole amount of the cashed in fund. Remember he payed tax on all the contributions he made at those times of investment. Can they charge income on moneys already paid again? And if this is hardship use, is there no way out of the tax?
Thx ahead...

only if you're 59.5 or buying your first home

M,
While I'm not a huge fan of some of the info found on TheFool,
this is one of the better written, understandable blips on the
Roth Early Withdrawl bite:
http://www.fool.com/money/allaboutir...boutiras07.htm

There are exceptions, more than the 1st home situ, but
I have no idea if the bro-n-law would qualify; "living expenses"
are not one of them, however.

And, since we don't know "how" he funded that Roth, he may
beat some of the taxes, but he will not beat the penalty, imo.

CPAs here can fill you better, but the Fool art. is pretty informative.
GL,mD

:thumbup: I forgot all abut the fool. Use to read it a couple of times a week.
But yeah early withdrawal equals BIG pentalty's