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To: Colin Cody who wrote (4511)4/13/1999 2:38:00 PM
From: Wayners  Read Replies (1) | Respond to of 7382
 
Lets say you decide to overfund your IRA, more than you are allowed, thus it being a prohibited transaction. Can you go ahead and pay the 6% per year penalty in the hopes of beating the 6% penalty in investment returns and still get the tax adavantages of the IRA on the overfunded portion?



To: Colin Cody who wrote (4511)4/20/1999 3:55:00 AM
From: Dan Duchardt  Read Replies (1) | Respond to of 7382
 
The penalty for removing all the funds from the IRA after such a prohibited transaction is that the taxpayer needs to pick up all the proceeds as income (no rollover allowed) and if he's under age 50.5 then the 10% penalty needs to be paid.

Is the 50.5 supposed to be 59.5, or has there been a change, or is this something I know nothing about specific to prohibited transactions?


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