Sound Politics Public Blog: My solution to this economic mess

November 26, 2008

My solution to this economic mess

I and many others have lifetime savings in IRA's but because of our ages we are unable to tap into them at this time, except through 72T's, which offer only meager withdrawals at best. I and many others have spent years dutifully saving and now through no fault of our own, we need to spend more out of my IRA' plans than a 72T's will allow for a few years. If (even on a temporary basis) the 10% penalty for early withdrawal was suspended, I and others could spend what is necessary to keep our homes, take care of our families, get our kids or ourselves educated or reeducated, and on top of that contribute to getting spending going again benefiting Government and the horrible economy today.

We can't just bail out the financial back ends if we don't give some relief to the people on the front end to spend.

Just my thoughts, but I sent it to all my representatives, if you agree do so yourself.

Posted by gschroe at November 26, 2008 01:12 AM | Email This

Comments

1. Sorry to hear about the tough times.

I know they were floating ideas of allowing us to tap our IRAs without penalties. Don't know how it turned out.

Don't know about yours, but right now, it would have been better if I had just been taxed instead of investing.

Posted by: swatter on November 26, 2008 01:38 PM

2. I am really sorry to hear about how tough times have hit you and so many other people who have done the right thing and yet are still get screwed.

Instead of being stuck with the penalties, I got a better solution for you. Go get employed as a Union Autoworker and then get laid off. Throught the Autoworkers Union Job Bank you will receive $31 an hour to sit at their Union Hall watching tv, playing cards, etc. until you are given a job.

http://www.foxnews.com/politics/elections/2008/11/21/automakers-ask-bailout-paying-workers-sit/

Posted by: TrueSoldier on November 27, 2008 03:41 AM

3. Here's an interesting way to tap some of your IRA penalty free (I have done it): underpay your Federal taxes. The IRS will waive the 10% penalty on IRA/401K distributions if those distributions are used to pay for Federal taxes owed. So if you underpay by $5000 in one year, you can pull out $5000 penalty free to pay those taxes. Easy way to get $400/month extra out of it.

Now, make sure and talk to a CPA first about how to balance this; there are penalties for underpaying consistently! You have to be within 10% of your expected total tax OR at 100% of the previous year's tax bill. Clearly for someone making a very consistent income this approach doesn't work, but if you can jerk your income around from year to year (like you can do if you're self-employed) this is a good approach.

And no, I'm not a lawyer or CPA, but I have found a few loopholes to ease the control and ownership the Federal Government has over my money!

Posted by: Shanghai Dan on November 27, 2008 07:05 AM

4. Another idea would be to cut back government spending to Clinton Era levels. This would allow us to elliminate the federal income tax which would make the need for IRAs to go away.

Posted by: Lysander on November 30, 2008 08:13 PM

5. And to continue from my previous comment...

I forgot to mention also that by eliminating the income tax and replacing it with nothing we would be spurring so much more growth than the measly tax cut Bush enacted and McCain and Obama spent hours debating.

If only we had more politicians in Washington that truly beleived in a free market we might actually get ideas like this debated in the halls of congress.

Posted by: Lysander on November 30, 2008 08:38 PM