If you provided the IRS with your bank account number on your tax return, both your refund and any Economic Stimulus rebate you qualify for will be automatically deposited to that account. And if you instructed that your refund be deposited into an account that is given favorable tax treatment under the Code, your Economic Stimulus Payments will be deposited there.
IRS recently announced that it will permit the tax and penalty-free withdrawal of 2008 stimulus rebate payments that were made directly into tax-favored accounts such as an IRA, a health savings account (HSA), an Archer MSA, a Coverdell education savings account (CESA), or a qualified tuition program account (QTP or 529 plan). Withdrawal, which may be up to amount of rebate, must be made generally by the due date of 2008 return (including extension), and won’t be treated as either contributed to or distributed from the account. This relief is available for amounts withdrawn from these taxfavored accounts that are less than or equal to a taxpayer’s directly deposited stimulus rebate. Without this relief, taxes, penalties and other special rules would apply to amounts removed from these accounts. Thus, for example, a taxpayer whose $1,200 stimulus payment is directly deposited into his or her IRA can take out any amount up to $1,200 from the IRA, tax-free and penalty-free.