IRA Distribution | IRA Manditory Distribution | IRA Minimun Distribution | Inherited IRA Beneficiary Distribution | IRA Premature Distribution Penalty | 72T IRA Distribution


Avoid An IRA Premature Distribution Penalty


Any time you plan to withdraw money from an state pension individual retirement account (IRA) before you are 59 1/2 years old, the withdrawal is subject to a distribution penalty. This includes other plans such as a tax-deferred annuity that is paid to a beneficiary who is also under 59 1/2. You will be hit with a 10 percent early withdrawal penalty, or an IRA premature distribution penalty.


Clickbank Affiliate Scripts

The only way to avoid the penalty is to wait until you have reached the required age limit, if at all possible. Like most rules, there are a few exceptions. Careful financial and tax planning will help you avoid penalty issues.

First, you must understand that there are a number of rules that limit the withdrawal and use of IRA assets. Violating these rules leads to a taxation of the amount you have withdrawn, plus the 10 percent penalty. The rules are the same whether you have a SEP-IRA or traditional IRA that was established under SIMPLE plans.

The exception to this rule is when the withdrawal occurs within the first two years of participation in a SIMPLE plan, you have to pay a 25 per cent penalty. This is an IRA premature distribution penalty that you want to avoid. The rules for the Roth IRA are more lenient.

There are a few situations identified as hardship withdrawals that can help you avoid an IRS premature distribution penalty. Though you will not have to pay a penalty, you will still be taxed at ordinary rates for the amount of money that is withdrawn from the IRA account. There is an IRS form that you must complete which provides an explanation for why the penalty does not apply.

Reasons an IRA Premature Distribution Penalty Does Not Apply

If you become disabled before you reach age 59 1/2, you will not pay the penalty as long as you can provide proof from your physician that you are disabled. There is an IRS approved calculation method that is used to determine the amount of equal distributions over your life or that of your beneficiary that continues until you are 59 1/2, or within five years, whichever is longer.

Another option for avoiding the penalty is if the money is used to pay for medical expenses that exceed 7.5 percent of your adjusted gross income. This is certainly a welcome benefit for people who consider filing for bankruptcy because of medical bills. You can also use the withdrawal to pay the health insurance premiums for you, your spouse or dependents if you become unemployed and receive unemployment compensation for 12 straight weeks.






San Francisco, Long Branch, Shelbyville, Bluefield, Novato, Martinsville, Covington, Nashua, Vermont, Michigan, Palmetto Bay, Satellite Beach, Kansas City, Plymouth, Athens, Bismarck, Martinsburg, Lyndhurst, Altoona, Calhoun, Plover, Marco Island, Fillmore, New York, Waynesboro, Laguna Beach, Waterbury, Virginia Beach, Virginia, West Melbourne, Pascagoula, Sarasota, Floral Park, Madison Heights, High Point, Wyoming, Loveland, Ohio, Cedar Hill, Howard, Dubuque, Atchison, Lindenhurst, Hazel Crest, Naples, Mississippi, O'Fallon, Wisconsin, Fulton, Pleasant Grove, Bremerton, Maryland, Weston, Clemmons, Matthews, Gardendale, Norton Shores, Apple Valley, Kerrville, Lakeville, Fort Myers, Maple Grove, Vienna, West Fargo, Enterprise, Belle Glade, Jacksonville, Chicago Heights, Athens-Clarke County unified government (balance), Lancaster, Irmo, Fort Pierce, Mamaroneck, Alabama, Ham Lake, Goodlettsville, Everett, Indiana


Structuring IRA Distributions to Avoid Penalties - Safe Harbor Planning

By Thomas Corley
Individual Retirement Accounts (IRAs) distribution rules are a mine field. One wrong move and you can find yourself faced with high taxes and penalties that can wipe out years of savings and investment. Complicating matters is the Darwinian evolution of IRAs that have taken place since the first IRA was introduced in 1974 with the enactment of the Employee Retirement Income Security Act (ERISA ). Since 1974, IRA rules have changed dramatically and legislation was enacted to severely punish those who do not follow the rules, to the letter of the law. IRAs come in many flavors but, for purposes of this article we will focus on the two main types of IRAs: Traditional IRAs and Roth IRAs.
[READ FULL ARTICLE]

Rollovers From 401k, 403b, Inherited IRA - Combine Multiple IRA Accounts

By Rocco Beatrice
Describes the unusual circumstances involved with rolling over an IRA from an existing company retirement qualified plan and from an inherited IRA. Discuss retaining multiple IRA accounts, combining or aggregating accounts, options on inherited IRA, taxes on inherited IRA.
[READ FULL ARTICLE]

Roth IRA's Explained

By Alexander Glaser
It's a popular saying that you should always save for the rainy day. Not only does it let you enjoy your present without any stress, it also ensures a comfortable life in the future. One such option is having an IRA account.
[READ FULL ARTICLE]

Tax Consequences of Failing to Take IRA Distribution

By Richard Chapo
The individual retirement account, better known as an IRA, has proved to be a very popular retirement vehicle for millions of Americans. If there is a downside to these accounts it is that you must start withdrawing money at a certain point. Failure to do so can lead to some absolutely brutal tax consequences.
[READ FULL ARTICLE]

Roth IRA Contributions - IRS Rules

By Richard Chapo
Confused about whether you can contribute to a Roth IRA? Try using these simple rules:
[READ FULL ARTICLE]



IRA Distribution | IRA Manditory Distribution | IRA Minimun Distribution | Inherited IRA Beneficiary Distribution | IRA Premature Distribution Penalty | 72T IRA Distribution