Asked 1/13/2011
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Tax on lump sum ira annuity I am 62 and using the cash to pay a student loan I took out for my son . |
Answer 1/1 - Submitted 5/5/2011
Unfortunately, a withdrawal from IRA or SEP accounts can never be a lump-sum distribution, so it can never qualify for the special tax rules. However, you can roll over one IRA into another, if you want.
But it sounds like you need all the money immediately, so maybe you can't roll it over.
If you were born before 1936 you get a more favorable tax treatment.
If you reach 59-1/2 years old, it's OK, if you participated in the plan for 5 years as an employee.
Unfortunately, it looks like ordinary income. Using it for medical bills might give you a little break, but not for student loans.
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