It is sad. We save for our retirement to be comfortable and the they tax us. Ira's and other plans such as 401k's are not tax free. They are tax deferred. The idea is that when you are older and retired you ill be in a smaller tax bracket and pay less taxes on the money then you would have while you were working. You needed the money so you did the right thing. Many of us are in the same situation. I look at it this way. If you go into a nursing home, they will take your assets. Might as well use your money and do what you have to do even if it is just to survive. You may be able to work out a payment plan on the taxes due. All money is generally taxable except Roth Ira's were you pay the taxes first and not when you withdraw the money. It can then grow in an account. If you have money left, check out Roth accounts.Schools have classes in investing. Banks are more than happy to help you. The investment company where you have the money should be able to guide you to Roth accounts. Rest assured my friend that you are not alone. Some people have 0 savings. You did what you had to.

Thank you dahlia639,

I've always worked hard, saved, and paid my taxes on time.

It's been hard financially to get myself anywhere post divorce. I heard all the warnings to save, save, save and don't take out of your retirement. But when you can't find a job and you have to live but you don't want to 'use the system', you get penalized for doing what you thought was right/best.

I guess the best thing I can do is try to find myself a way to dig out of this IRS debt. I suppose it's better than owing 10xs more for student loans as my children will end up having to do.

Land of Opportunity right? We need free education and healthcare. Time for America/politicians to stop being so greedy.

Thank you for helping me calm down.

It is sad that our government is the way it is. I had to take a hardship withdrawl from my retirement this last year and told them to withhold taxes, but they actually only withheld the 10% penalty and the money I took out put me into the 25% tax bracket so I ended up owing about nine thousand in taxes this year when I have never had to pay in at the end of the year. I took my retirement money to pay off debt so I could actually afford to buy food and not be strapped living two pay checks behind and now I am back in debt again borrowing to pay the IRS.

Another ripp off the government does to US is social security. We pay into our entire lives and if we die they keep all of it and our family are strapped even to bury us. If you die with a retirement account or pension account the government takes about 1/2 of that from your beneficiary also.

The rich crooks that are the politicians in Washington need to be thrown out and replaced by WE THE PEOPLE that would actually do some good for the people in this country. NO ONE in government has to live with the healthcare, retirement, or social security laws they put into place, because they are above that. That NEEDS to change and they should no longer be above the people they serve. That is the only way things will ever get fixed.

Yes you are right. According to your profile, you are still very young. That means you have plenty of time to re-group, payoff debts, and start again. It is worse when someone is older and they lose everything. There are free debt counseling services, attorneys that give advice, and maybe even the IRS can guide you in the right direction. The best thing is to accept that you did what you had to do. Now you need a plan as to how to deal with the money owed. Find it and keep going! You are amazing to have saved money at such a young age. How inspiring you are to your children! Take care

Lostsoul72, you sound like my story. Taking out of retirement to pay of debt and have food & a place to stay.

dahlia639, yes, I am young, but it's still hard to feel like you have gone backwards to nothing. I know I have time to recover, it's disappointed in myself as much as I am with the IRS.