Clarification on a TIRA

[Investnewbie01]

Hello
I am over 60 and have just opened a T IRA and funded it to the max of $6500.
if I withdraw part of it in less than a year, is there any penalty, other than paying my current tax rate of 25%? Can I then top it up or is it subject to only one $6500 top up per fin year?
In essence thinking I could transfer some ready cash to this account?
Clarification would be helpful please?
Thank you

[kaneohe]

You can only contribute 6.5K annually to TIRA. If you withdraw funds, you will be taxed on withdrawal only, no penalty. Even if you could add more top it up to 6.5K, what have you accomplished. Taken money out , replaced it, got a tax bill but same amount of funds in TIRA. Isn't it better to leave it alone and not get the tax bill?

You could also ask explicitly for a return of this yrs contributions . In this case no tax and you get the use of the withdrawn funds and can then replace them in the TIRA. Again to what purpose? You get the use of the funds but it sounds like you have $$ burning a hole in your pocket and don't need them. If/when you replace the funds in TIRA, what do you have........the same as original situation w/ tax on funds earned while you had them out of TIRA instead of tax deferred if you had left in TIRA.

[lazylarry]

Hello
I am over 60 and have just opened a T IRA and funded it to the max of $6500.
if I withdraw part of it in less than a year, is there any penalty, other than paying my current tax rate of 25%? Can I then top it up or is it subject to only one $6500 top up per fin year?
In essence thinking I could transfer some ready cash to this account?
Clarification would be helpful please?
Thank you

-If you deducted taxes for it, then you will pay your current ordinary tax rate on the contributions and earnings. If not, you just pay taxes on the earnings.
-you can only contribute $6500 per year. Taking money out doesn't mean you can put more in.
-I would probably wait until you are in retirement to take withdrawals, as you will be at a lower tax rate.

http://www.schwab.com/public/schwab/inv ... awal_rules

[Investnewbie01]

Many thanks for your advice