When Can You Take Penalty-Free Withdrawals?
Saying goodbye to the working world might be a dream come true, particularly for hardcore savers inspired by the high-profile movement dubbed FIRE (Financial Independence Retire Early).
Unfortunately, many others are forced to leave the workforce abruptly or must tap into retirement savings for other pressing needs.
This week, Craig Siminski, of CMS Retirement Income Planning, shares information on how the rules for early-distribution penalty exceptions differ for withdrawals from traditional IRAs and employer-sponsored plans:
When it comes to the money in tax-deferred retirement plans, it doesn’t matter whether you are a proponent of FIRE or are unexpectedly fired.
Withdrawals taken prior to age 59½ are normally subject to a 10% federal tax penalty — unless an exception applies — on top of ordinary income taxes.
There is usually no way to avoid the income tax, but there are situations in which you can take penalty-free distributions from tax-deferred retirement accounts before reaching age 59½
The rules for the following penalty exceptions differ depending on whether the money is withdrawn from a …
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Craig Siminski is a CERTIFIED FINANCIAL PLANNER™ professional, with more than 21 years of experience. His goal is to provide families, business owners, and their employees with assistance in building their financial freedom.
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