In a Bind? A Few Ways to Get Money from an IRA Penalty-Free

December 12, 2011

Lost your job?  Unexpected HIGH expense?  Unless you have a good nest egg put away for a rainy day, you might be scrambling for funds to cover unexpected expenses, and your IRA might be a place to look for that needed cash.

Are you aware that funds withdrawn from an IRA are taxable, and if you are under 59-1/2, you will pay a federal penalty of 10% and possibly a state penalty too?

Withdrawing funds early from your IRA will affect your standard of living when you retire.  We hope that you never have to do that, but if you do, here are a few ways to beat the early-withdrawal penalty.  (Of course, you still need to deal with the IRS and income taxes – no way to get around that)

·       Annuitize: Under IRC Sec. 72(t) you can avoid penalties by taking a series of substantially equal periodic payments until you are 59-1/2 (but not less than five years). To estimate how much you can withdraw each year, use the 72(t) calculator at (See::

·      Buy a Home:  If you have been renting, had alternative living arrangements, and have not owned a home for at least two years, you can withdraw up to $10,000 to buy a house in your name or in the name of a spouse, child or grandchild.

·      Pay for Education: You can go back to school, or withdraw funds for college tuition and related expenses (books, materials, fees) for your spouse, children or grandchildren.  Be aware that certain income limits apply.

·      Cover Medical Expenses: If your medical expenses (for you, your spouse or dependant) exceeds 75% of your income, you can withdraw from your IRA penalty-free.

·      Pay Medical Insurance Premiums: If you have been unemployed for at least twelve (12) weeks, and receive unemployment compensation, you are eligible to withdraw funds to pay for your medical insurance premiums.

·      Pay Back Taxes to the IRS:  If the IRS has placed a levy against your IRA, you can withdraw funds to pay the back taxes.

·      Disability: If you are “totally and permanently disabled” by IRS definition, you can take distributions from your IRA without penalty.

·      Death: Did you know that when you die, your beneficiaries must begin taking distributions from your IRA, and there will be no penalty to them.

This blog is written based on my observations and experience.  I am and not a CPA, tax planner or tax attorney.  I am a mediator and former family law attorney. All data and information provided on this site is for informational purposes only. makes no representations as to accuracy, completeness, currentness, suitability, or validity of any information on this site and will not be liable for any errors, omissions, or delays in this information or any losses, injuries, or damages arising from its display or use. All information is provided on an as-is basis.

Mediation is Best for Building & Maintaining Relationships Between Non-Custodial Parents & Their Children

August 30, 2011

 If you are posturing for, or in the middle of a custody dispute, try mediation. This is especially true if you are the parent who thinks he or she may end up as the non-residential parent (non-primary custodian).  As a non-residential parent, your odds of building a strong and long-lasting relationship with your children — by being a part of their lives while they are growing up —  is much greater if you opt for mediation over litigation.

            Dr. Robert Emery, author of the highly acclaimed book, The Truth About Children & Divorce, conducted a 12-year study which supported this claim. Dr. Emery followed numerous families, who were all involved in high conflict custody disputes, for a 12-year period of time (commencing from their divorce settlement negotiations, through their divorce and for the remainder of time that they were raising children as co-parents). Those families were randomly assigned either a mediator or a lawyer for the resolution of their case. Dr. Emery made two very interesting findings: In cases where custody disputes were mediated versus litigated, the non-residential parents saw their children, on a weekly basis, at least 19% more than their litigation counterparts (28% versus 9%) and spoke on the phone with them, on a weekly basis, at least 38% more (52% versus 14%).

Dr. Emery’s study also found that non-residential parents scored much higher in many areas — including discipline, grooming, religious and moral training, running errands, celebrating holidays, taking part in significant events, school and church activities, recreation, vacations, and problem solving as related to their children — when scored by the residential parent (primary custodian) where custody disputes were mediated.  What does that matter?  Tons.

The primary custodian of your child is, obviously, in a position of tremendous influence over that child.  This often includes the child’s beliefs and feelings about the other parent.  With poorly developed communication skills and negative feelings between the parents (both of which are matters that mediation tries to remedy), this is often a recipe for disaster — at least in terms of building parent-child relationships with the non-custodial parent.

Good communication skills and a positive relationship between co-parents, however, tend to help build the bond between the non-custodial parent and child.  How does mediation fit in?  The process of mediation helps parents focus on their children and not on each other.  Good mediators are able to encourage parents to respect one another (as much as possible) and support each other as parents.  After all, most experts agree that children deserve and have the right, when at all possible, to have two involved parents in their lives.  It helps them become stronger adults.

You only have one shot to raise your kids.  Mediation helps you sort through the issues and make good choices for your children in your new life as a two-home family.


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