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 Violating these rules leads to a taxation of the amount you have withdrawn, plus the 10 percent penalty.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 Though you will not have to pay a penalty, you will still be taxed at ordinary rates for the amount of money that is withdrawn from the IRA account.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


IRAs - Overlooked Major Gifts

By Robert Cavanaugh
Naming a church or a charitable organization as the beneficiary of one of your IRAs will provide tax benefits in some instances and help many people after you are gone. However, you must be careful to structure the IRA and the beneficiary arrangement properly or you can run into problems.
[READ FULL ARTICLE]

Trust-Owned Annuities

By Julius Giarmarco
This article discusses, in detail, the income tax consequences of irrevocable trusts owning annuity contracts, and how to properly design such trusts. Although trust-owned annuities involve a significant degree of complexity and uncertainty, they can be extremely beneficial.
[READ FULL ARTICLE]

Four Top Tax Planning Strategies For Retirees

By Chintamani Abhyankar
To plan taxes for retirement can prove complicated. You will need a strategy to reduce your tax burden which can allow to retain more assets and ultimately benefit your heirs also.
[READ FULL ARTICLE]



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