Money Matters: How to get a do-over with your IRA

December 15, 2017 01:30

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Individual Retirement Accounts or IRAs are a popular way to save money for retirement. They can be flexible in terms of how your money is invested and they can provide an easy way to set aside money to reduce your taxes during your working years. If you have an emergency and need to withdraw funds from an IRA, you can face a 10 percent early withdrawal penalty, you would be required to pay taxes on what you take out. But there are ways to put money back in to an IRA and save some money.

As MarketWatch details, if you replenish what you have withdrawn within 60 days, it's as if the withdrawal never happened. You won't have to pay taxes on the amount you took out. However, if you take out money a second time within a 12-month period, you're on the hook for taxes on the second withdrawal. The 10 percent penalty doesn't go into effect if you're taking out up to $10,000 to buy a house. But what if the deal falls through? You can put it back within 120 days without penalty.
To help your viewers/readers/listeners learn more about how IRAs work and the kinds of penalties and tax consequences involved when money is taken out before retirement, talk with a personal banker or financial planner in your market. They can demonstrate how IRAs can be used to the best advantage for retirement and tax purposes, and talk about the different types of accounts that suit different kinds of investors.

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