A withdrawal made before you are 59½ years old from your retirement savings plan "whether it is an IRA or a qualified plan through an employer"is considered to be an early withdrawal. For every early withdrawal you make, you will have to pay a 10% early distribution tax to the federal government.
Generally, you will not want to start dipping into your retirement savings early unless there are dire circumstances that demand otherwise. There are a few exceptions that allow you to start making early withdrawals without facing the 10% tax:
Be sure to read over any forms you received when you opened your retirement account. These forms can explain how the account works, including what taxes are applied and when. If you have an employment plan, you may want to ask your employer for more information about the tax implications. Finally, you may want consult a tax attorney for help understanding how you contributions to and distributions from the account are taxed. Your attorney can help you understand when and how your earnings are taxed, and help you choose what kind of retirement plan may be best suited for your needs.
Last Modified: 06-28-2018 08:26 PM PDTLaw Library Disclaimer
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