Retirement Distributions

That is a good question and one that I often see asked too late. You should always consult a tax professional before making a decision of this nature. There are several answers to this question. The answer mainly depends on your age, the type of IRA, and your individual tax bracket. For purposes of this queston we will discuss traditional IRA's. As a general rule if you are under age 59 1/2 a distribution from a traditional IRA is subject to a 10% penalty. However there are several exceptions to this rule so you should consult a tax professional if you think you may be exempt. In addition to the penalty you could be subject to ordinary income tax and possibly state tax. This will depend on your individual tax brackets. (For information on this search this site for Individual tax Rates) The mistake that many make is they see the 10% withheld from there check and assume that that will cover there tax liability. Unfortunatly that often only covers the penalty and not the actual income tax.

The information contained on this site should in no way be considered to be professional advice in the form of either tax, accounting, or legal service or consultation. You should always consult with a professional familiar with your individual circumstances before making any specific decisions related to accounting, tax, or legal matters.