AboutJohn Stancil, CPA Expertise I can answer questions on personal income taxes, partnerships, and some corporate income taxes. I can deal with some state tax questions. Limited gift and estate tax questions. I am also familiar with ministerial and church tax reporting issues. I teach tax and accounting at a small church-related college. Sales taxes and property taxes are state and local issues so I am not likely be be able to give you an in depth answer on those types of taxes. I have maintained a part time tax practice for over 30 years. I am a member of the AICPA, National Society of Tax Professionals, and the Institute of Management Accountants.
Experience I hold a doctorate in Accounting, and four professional certifications: CPA, CMA, CFM, and CIA. I passed all certification examinations on the first attempt, and received honorable mention for my scores on the CIA exam. I write a monthly tax column for the local newspaper.
Expert: John Stancil, CPA Date: 7/18/2008 Subject: Early IRA Withdrawal
Question I have 2 homes and other real estate that I own free and clear. No rental income from any of them...One of them (my principal residence) I have on the market as I need funds to live on...I have taken small early withdrawals from my Rollover IRA to keep me going until it sells...I am not working at the present time and have not worked in a few years. My company bought me out 5 years ago and I am trying to figure out what I want to do when I grow up. I am 49.
My questions: I know the early withdrawal has a 10% penalty and is taxed as normal income...After I sell my house, can I make my maximum contribution to the IRA even without working, thus lowering the taxable income amount?
Also, can I after I sell the house, if within 60 days of a distribution, put the funds back into the IRA as a rollover, again having no "working income"?
Thank You
Answer Dale,
You cannot contribute to an IRA unless you have earned income, which you do not appear to have.
If the funds are placed in an IRA withing 60 days of withdrawal, it is not income and there is no penalty.
