Originally Posted by shazam

Is this correct Hawk? I took out a small (10,000) IRA a few years ago. The money I used to purchase this IRA was from savings I had accumulated from paydays over a few years. Keep in mind, I had already paid taxes on these earnings. So when I recently went to cash in this IRA, I was told that I had to pay 20% tax on the accumulated roughly 13,000 that it was currently worth before withdrawing it. I asked the girl about it explaining that I've already paid taxes on the 10,000 and shouldn't I be taxed only on the roughly three thousand. The best explanantion I could gather from her was "you haven't been paying taxes on this over the past 5 or so years". After a few minutes of discussion, I knew it was useless to pursue because that's the point she kept coming back to. I'll eventually find out when I have my taxes done for "09, but I've yet to find someone who can explain to me why I should be taxed on the 13,000 instead of the accumulated interest of 3,000 in order to withdraw this money.