If you are thinking about an IRA withdrawal, there are some specific points to know about in order to avoid penalties or hassle...
You may need to pay a 10% additional tax if you withdraw from an IRA before the age of 59½.
Also, when you reach the age of 70½, you have until April 1st of the following year to begin minimum withdrawals. If not, there may be an excise tax penalty (IRS Topic 451).
Use the IRA calculator to see what an IRA can do for you.
There are several exceptions to the age 59½ rule. Even if you receive a distribution before you are age 59½, you may not have to pay the 10% additional tax if you are in one of the following situations.
(See Age 59 1/2 rule for further info on above exceptions.)
- You have unreimbursed medical expenses that are more than 7.5% of your adjusted gross income.
- The distributions are not more than the cost of your medical insurance.
- You are disabled.
- You are the beneficiary of a deceased IRA owner.
- You are receiving distributions in the form of an annuity.
- The distributions are not more than your qualified higher education expenses.
- You use the distributions to buy, build, or rebuild a first home.
- The distribution is due to an IRS levy of the qualified plan.
- The distribution is a qualified reservist distribution.
Receiving Annuity Distributions
As we just read, receiving annuity distributions is an exception to withdrawal penalties from distributions is an exception to withdrawal penalties from your IRA...
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