1. Withdrawals from IRAs: When owner is under age 59 ½ MontGuide200308 Marsha A. Goetting, MSU Kristen G. Juras, School of Law, University of Montana Revised 2003

2. Marsha A. Goetting MSU Extension Family Economics Specialist P. O. Box 172800 Montana State University Bozeman, MT 59717 406-994-5695

3. 6 MontGuides 1.Individual Retirement Accounts 2.Shopping for an IRA 3.Withdrawals from IRAs  When owner is under 59 ½  When owner is between 59 ½ & 70 ½; turns 70 ½ 4.Inheriting an IRA: Planning techniques  Primary beneficiaries  Successor beneficiaries

4. Individual Retirement Accounts www.montana.edu www.montana.edu Search: Search:  Individual Retirement Accounts

5. IRA Tax Law Changes Economic Growth & Tax Relief Reconciliation Act of 2001Economic Growth & Tax Relief Reconciliation Act of 2001

6. Withdrawals General Rule General Rule  Subject to 10% penalty on amount withdrawn if owner is under age 59 ½

7. Withdrawals before 59 ½ Can be made w ithout 10% excise tax under certain circumstancesCan be made w ithout 10% excise tax under certain circumstances

8. 1. Medical Expenses Qualified unreimbursed medical expenses greater than 7.5% of adjusted income. Qualified unreimbursed medical expenses greater than 7.5% of adjusted income.

9. 2. Health Insurance Premiums by an unemployed person Premiums by an unemployed person  12 or more weeks

10. 3. First-time home buyer expenses Qualified acquisition costs up to $10,000 Qualified acquisition costs up to $10,000

11. Principal residence IRA owner IRA owner His/her spouse His/her spouse Children Children Grandchildren Grandchildren Ancestors Ancestors

12. 4. Qualified higher education expenses Tuition & Fees Tuition & Fees Textbooks Textbooks Supplies Supplies Computer Equipment Computer Equipment

13. 4. If at least half-time student Qualified Expenses includeQualified Expenses include  Room  Board

14. 4. Higher Education Qualified Users IRA owner IRA owner His/her spouse His/her spouse Children Children Grandchildren Grandchildren

15. 5. Disability Withdrawal due to disability of account holder Withdrawal due to disability of account holder  No 10% penalty

16. 6. Death Withdrawal due to death of account holderWithdrawal due to death of account holder  No 10% penalty

17. Owner Owner Owner & beneficiary Owner & beneficiary 7. Equal payments based on life expectancy

18. Question #8 What % of IRA owners made a withdrawal from a traditional IRA during 2002? What % of IRA owners made a withdrawal from a traditional IRA during 2002?

19. Answer: #8 % of owners making withdrawals from traditional IRA % of owners making withdrawals from traditional IRA  16%

20. Roth Withdrawals Tax-year 2002 Tax-year 2002  2%

21. Withdrawals from IRAs: When owner is under age 59 ½ For review refer to: MontGuide200308 Revised 2003