Withdrawal IRS Stimulus Payment From Your IRA Penalty and Tax Free
By choosing to have your 2007 tax refund directly deposited into an individual retirement accounts (IRA) or any other tax-favored account, your stimulus payment will follow suit and also be directly deposited into the same tax-favored account. But don’t worry, the Internal Revenue Service (IRS) is allowing you to withdrawal your money tax-free and penalty free. Why, to stimulate the economy of course.
In order to qualify, you must request to have your funds taken out of your tax-favored account by April 15, 2009 or October 15, 2009 for anyone who obtained tax-filing extensions. Types of accounts that qualify are: Traditional and Roth IRAS, Archer MSAs, Health Savings Accounts, Qualified Tuition Programs (QTPs or Section 529 plans), and Coverdell education savings accounts.
If you are reading this and it pertains to you, congratulations! By using your tax refund to fund your IRA, you are jump-starting your retirement. If you think depositing a thousand dollars here and there won’t do much, think again. If you receive on average a tax refund of about $1,000/year and invest it, instead of blow it, look at what you could acquire over a 30-year period….
Assuming: 30 Years of $ 83.33/month (1k divided by 12 months)
Interest Rate of 8.000 % Compounded Annually
| Year |
Balance |
| 0 |
$ 1,037.45 |
| 1 |
$ 2,161.01 |
| 2 |
$ 3,377.83 |
| 3 |
$ 4,695.64 |
| 4 |
$ 6,122.83 |
| 5 |
$ 7,668.47 |
| 6 |
$ 9,342.40 |
| 7 |
$ 11,155.27 |
| 8 |
$ 13,118.60 |
| 9 |
$ 15,244.89 |
| 10 |
$ 17,547.66 |
| 11 |
$ 20,041.56 |
| 12 |
$ 22,742.46 |
| 13 |
$ 25,667.52 |
| 14 |
$ 28,835.37 |
| 15 |
$ 32,266.14 |
| 16 |
$ 35,981.66 |
| 17 |
$ 40,005.58 |
| 18 |
$ 44,363.47 |
| 19 |
$ 49,083.07 |
| 20 |
$ 54,194.39 |
| 21 |
$ 59,729.95 |
| 22 |
$ 65,724.96 |
| 23 |
$ 72,217.56 |
| 24 |
$ 79,249.03 |
| 25 |
$ 86,864.11 |
| 26 |
$ 95,111.24 |
| 27 |
$ 104,042.88 |
| 28 |
$ 113,715.84 |
| 29 |
$ 124,191.65 |
Final Savings Balance: $ 124,191.65
Related articles you might be interested in:
If you enjoyed this post, please consider to leave a comment or subscribe to the feed and get future articles delivered to your feed reader or email.
This is a great idea!