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[retirement planning]
Penalties for withdrawals before age 59 ½
Traditional IRA
Penalty: 10% (in addition to the regular tax on the distribution)
Exceptions to the penalty: death, disability, medical expenses over 7.5% AGI, college for self, spouse, child or grandchild, first time homebuyer ($10,000 limit), annuity payout over life expectancy
Roth IRA
Penalty: 10% on the earnings (never the principle contributed). A Roth requires a five-year holding period before distributions, even if over age 59 ½. Since Roth money has already been taxed, there is no penalty for anyone until total withdrawals exceed total contributions.
Exceptions to the penalty: death or disability, first time homebuyer ($10,000 limit)
SEP IRA
Penalty: 10% penalty (in addition to the regular tax on the distribution)
Exceptions to the penalty: death or disability, first time homebuyer ($10,000 limit)
SIMPLE IRA
Penalty: 10% penalty (in addition to the regular tax on the distribution) UNLESS it's within the 2-year holding period, then it's a 25% penalty
Exceptions to the penalty: death, disability, medical expenses over 7.5% AGI,- college for self, spouse, child or grandchild, first time homebuyer ($10,000 limit), annuity payout over life expectancy
401-K
Penalty: 10% penalty (in addition to the regular tax on the distribution)
Exceptions to the penalty: death, disability, severance from employment after age 55, financial hardship, medical expenses, qualified reservist
Roth 401-K
Penalty: 10% on the earnings (never the principle contributed). A Roth requires a five-year holding period before distributions, even if over age 59 ½ Since Roth money has already been taxed, there is no penalty for anyone until total withdrawals exceed total contributions
Exceptions to the penalty: death, disability, severance from employment after age 55, financial hardship, medical expenses, qualified reservist