Early withdrawal

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Early withdrawal

Early Withdrawal

The withdrawal of funds from a fixed-income investment before the prescribed time. Early withdrawal may come from a certificate of deposit before its maturity. More often, however, it refers to a withdrawal from a retirement account before the appropriate age (usually 65 or the date of retirement, whichever is later). Early withdrawals are usually assessed a fee to discourage frequent or abusive use. As a result, early withdrawals usually occur when the account holder is in great financial need. An early withdrawal is also called an early distribution or a premature distribution.

Early withdrawal.

If you withdraw assets from a fixed-term investment, such as a certificate of deposit (CD), before it matures, it is considered an early withdrawal.

Similarly, if you withdraw from a tax-deferred or tax-free retirement savings plan before you turn 59 1/2, in most cases, it's considered early.

If you withdraw early, you usually have to pay a penalty imposed by the issuer (in the case of a CD) or the government (if it's an IRA or other tax-deferred or tax-free savings plan).

However, you may be able to use the money in your account without penalty under certain circumstances. For example, if you withdraw IRA assets to pay for higher education, to buy a first home, or for other qualified reasons, the penalty is waived. But taxes will still be due on the tax-deferred portion of the withdrawal.

References in periodicals archive ?
New law: The new law allows two additional exceptions to the penalty on early withdrawals from an IRA.
A situation may arise when retirement savings might be needed for a possible emergency in the near future, when a Federal tax penalty of 10% is imposed on early withdrawals.
Reaching age 59 1/2, boomers gain access to their tax-qualified retirement savings - such as IRAs, 401(k) plans and other retirement accounts - without having to pay IRS tax penalties for early withdrawals.
Colonial encourages customers with storm-related needs to ask about possible penalty-free early withdrawals from their CDs.
Early withdrawals may be subject to surrender charges and if taken prior to age 59 1/2, a 10% IRS penalty may apply.
Most GICs have a fixed maturity date (or dates) when the principal portion of the investment must be repaid and provide for early withdrawals of all or a portion of the principal upon notice from the buyer.
IRAbc's - This educational section explains IRAs, including: the different types of IRAs; 401(k)-IRA rollovers; Traditional-to-Roth conversions; and withdrawals (including rules for early withdrawals and exceptions to the early withdrawal penalty).
As long-term savings, 401(k) plans are not intended to be accounts from which contributors can make early withdrawals.
When financial times get tough, some people make regrettable decisions, like taking early withdrawals from 401(k) accounts.
Nottingham yesterday saw early withdrawals from the Betfred Eclipse heats with Dalcash Scolari (9.

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