How do i calculate the penalty for an early withdraw of $4500 from my Roth IRA?
Answers:
I don't know what these other posters are talking about--you don't need to pay any taxes or penalties!! You're not really withdrawing the funds; you're transferring your IRA from one firm to another. No penalties are necessary.
All you have to do is transfer the IRA directly from Fidelity to Zecco (assuming Zecco offers an IRA). Contact Zecco and they will take care of the transfer for you; you'll never touch the funds. The funds need to go direclty from Fidelity to Zecco--not to you first. If you withdraw the funds yourself and then re-deposit them with Zecco, you may owe penalties on any earnings (at the very least it'll be a pain to document what you did on your 2007 taxes to avoid gains).
But just so you know, you can always withdraw any Roth IRA contributions penalty and tax free (you've already paid taxes on them). You can't withdraw the EARNINGS on those contributions until you retire (if you do you'll pay a 10% penalty but never any taxes).
There is no penalty because you are rolling it over into the same type of account. Unless of course you are planning on putting in a taxable account which would be a terrible choice. You probably can do it faster by withdrawing and depositing rather than TOA. You will have a $50 account closing fee from Fidelity so that's sort of a penalty. At years end you'll get a 1099-R from Fidelity for the withdrawal and a 5498 from Zecco and you use them to offset each other so you aren't taxed or penalized.
if its going to a roth ira there arent any penalties, you sound like you dont have enough patience for investing or trading, why not just let the new company roll it over to them instead of cashing out?
or best yet is leave it at fidelity in a roth ira in a mutual fund, i can bet it will beat your trading in the long run, and fidelity is a great company
EDIT: feeling mutual-roths are already taxed so he would only be taxed on the gain, he wont lose alot in taxes unless its nearly all gains,
i believe the 10% penalty is only on the gains as well, and only if the withdraw is for an unqualified reason, as this would be , rollovers are tax/penalty free, but if he just withdraws it and doesnt switch within 60 days he has to pay
The penalty is always 10%, so $450.
You still have to count the $4500 as income, so you have to pay taxes on it now also. Both state and federal. So when you take it out, you could easily lose 30-50%, and it will put you in a higher tax bracket.
Have them roll it for you to avoid the $450 penalty. If it comes to you in a check with your name on it, it is penalized. Just remember one thing. IRA's are for the long haul. I wouldn't do a lot of trading in any IRA account.
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