Jan 6

I am looking into withdrawing my IRA early, I was told to withhold an amount in order not to be penalized later on by the state and the IRS, what percentage should it be?


6 comments so far...

  • max_rochny Said on January 6th, 2010 at 2:48 pm:

    always talk to an accountant or a tax lawyer when it comes to the IRS……………….

  • matt d Said on January 6th, 2010 at 3:13 pm:

    lots

  • ntate713 Said on January 6th, 2010 at 3:28 pm:

    You will be double taxed. And penalized 20%. So hold out 20% for when you file taxes.

  • Randalf Scott Said on January 6th, 2010 at 3:57 pm:

    There is typically a 10% penalty for non-qualified distributions form tax sheltered financial instruments such as IRAs. Depending on the type of IRA, this penalty will be assessed and income taxes will have to be paid on the dispersement.

    Certain situations can avoid the 10% penalty fee such as dispersements for education, medical bills, etc.

    This mostly depends on your situation and the type of IRA. I would suggest talking to your financial advisor, the IRA plan agent, or a tax advisor.

  • Sizen Said on January 6th, 2010 at 4:32 pm:

    Don’t withdraw $ from your IRA unless you ABSOLUTELY HAVE TO…why? The fact that you are withdrawing $ at all (before the age of retirement) means you WILL BE PENALIZED. I dont know who told you you could avoid this by withholding a certain amount, but you got some bad advice…The $ you put into your IRA was “pre-tax” dollars…if you withdraw $ early (ie. before you retire) you will be (1) taxed on the dollar amount as if you were earning it as wages (I dont know what tax bracket you are in, but look at a recent paycheck or W-2 from 2007, and you can ‘guesstimate’ ) (2) in addition, you will be penalized more $ for early withdrawal . These (2) things combined typically amount to a loss of 30%-50% for early withdrawal!! Obviously, the govt. does this in order to strongly discourage people from taking $ out of their IRA’s…so, my advice once again is, don’t do it unless you absolutely have to! S.

  • Judy Said on January 6th, 2010 at 5:02 pm:

    Income tax percent varies depending on your total income for the year including the amount withdrawn. There is an additional 10% of the withdrawn amount charged on your federal return as a penalty for early withdrawal.

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