Getting money out of IRA at a young age

WaxAddict

WaxAddict

New member
Hi all. So I have a friend who has had a life-changing event and needs money. She wanted to get money out of her traditional IRA held by a local bank. She's well aware of the taxes and penalty. She doesn't qualitfy for any of the pre-59.5 withdrawal liberites.

From what I understand, she waltzed into the bank, met with a banker, said give me X amount, and they gave her so much grief and paperwork and brochures etc etc that it seemed to me like illegal harrasing in the bank's part. I would have expected her to get a short lecture, but not this treatment. Now, she's confused about how she can access the money, or if she even can! She came to me, but my idea of managing my money is buying the gallon size jug of Adam's Detailer rather than 16 oz.

Can't she just demand the money? Can the bank do this? I looked at the paperwork and it seemed to just be a worksheet of how she could apply for a loan against the IRA.
 
The money is her's to take unless it's tied up in an annuity or something with a future surrender date. Then she'd incur state taxes, federal taxes, pre-59.5 penalty and possibly surrender charges, if applicable.

You can use IRA money for 60 days but you have to put it back within that time frame.

There are no "loan" provisions on an IRA.

The bank is going to "secure" a personal loan against the IRA account? Is that kosher??
 
My basic understanding is similar to Tom's.

The money is hers to use if she chooses. But yes she is basically taking out a loan on her IRA that I believe does include interest and she must repay in in a given timeframe. It can be a smarter way of taking out a loan vs the "pay day loan" centers that charge crazy interest rates.
 
WaxAddict said:
Hi all. So I have a friend who has had a life-changing event and needs money. She wanted to get money out of her traditional IRA held by a local bank. She's well aware of the taxes and penalty. She doesn't qualitfy for any of the pre-59.5 withdrawal liberites.

From what I understand, she waltzed into the bank, met with a banker, said give me X amount, and they gave her so much grief and paperwork and brochures etc etc that it seemed to me like illegal harrasing in the bank's part. I would have expected her to get a short lecture, but not this treatment. Now, she's confused about how she can access the money, or if she even can! She came to me, but my idea of managing my money is buying the gallon size jug of Adam's Detailer rather than 16 oz.

Can't she just demand the money? Can the bank do this? I looked at the paperwork and it seemed to just be a worksheet of how she could apply for a loan against the IRA.
Click to expand...

The answer is too complicated to answer without knowing more details: Here is a link with good information that may answer your question - When Its OK To Tap Your IRA - Avoid A Tax Penalty | Bankrate.com

Hope this helps.
 
Thanks for the responses. I think she needs her father to go in with her. Maybe the bank is taking advantage of her young-ish and demure personality, like some car dealers will do to women. Despicable.

This banker person manages her IRA, and I think if she gets money out, it affects his status or potential income somehow, so he's naturally hesiatnt to give it to her, but he shouldn't be. I think he's breaking a law, but we'll wait a while to blow up on that one.

tkendrick, she (we) have read all those provisions. She knows it's not a financially "good" thing to take a 10% penalty hit then 20-something% tax hit. I told her if she wants to walk away with $50k, she's going to reduce her IRA by like $67k !!
 
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