Originally Posted by amyri
I rolled over an IRA indirectly in to a pension plan to buy retirement time. Because it was indirect the retirement fund called it post tax & taxable. The IRS has sent me a bill for early withdrawal. Any ideas?
An indirect rollover has more regulations, because the money goes through you, the IRA owner. Moving assets from one qualified retirement plan to another can be done either through a transfer or rollover. Indirect rollovers, where a check is sent to the IRA owner, tend to be faster but have more risk of being assessed penalties if the IRA owner does not satisfy the requirements in a proper or timely fashion. The IRS provides an IRA owner a 60-day window to complete an indirect rollover. If the rollover is not completed within this time frame, the IRS treats the rollover as a complete distribution. As such, the entire balance of the IRA is added to ordinary income. As long as you are under age 59 ½, there is also a 10 percent tax penalty assessed on the assets. The 60 days starts the day you receive the distribution from the existing IRA custodian. The 10% additional tax on early withdrawals from an IRA would not be a deductible expense because it is a federal tax.