Penalty tax

Penalty tax

A federal tax that can be applied if a plan holder does not meet certain requirements when making withdrawals from a tax-advantaged retirement plan (for instance, if the plan holder has not reached age 59-1/2). This penalty tax is owed in addition to any income taxes due.

Penalty Tax

An excise tax imposed upon an unauthorized withdrawal from a retirement account, such as a 401(k) or an IRA. Most commonly, a penalty tax is assessed when one makes a withdrawal before the age of 59 1/2. See also: Hardship withdrawal.
References in periodicals archive ?
The Tax Cuts and Jobs Act also eliminates Obamacares individual mandate penalty tax, providing families the flexibility to make their own health care choices.
Only the amount contributed must be withdrawn, though a 6% penalty tax applies (and will continue to apply for each year that the excess contribution remains within the Roth IRA).
Of course, pre-591/2 distributions must satisfy the "substantially equal periodic payment" (SEPP) rules of IRC Section 72(t) to avoid the additional 10 percent penalty tax for premature distributions.
However, with ObamaCare constantly "evolving," the penalty tax will soon match or surpass the premium costs, in order to force "universal participation," a foundational goal of ObamaCare.
Also, if the non-qualified SPIA is part of a Section 1035 exchange from an existing deferred annuity, this will have a bearing on whether the pre-59-and-a-half penalty tax of 10 percent will apply to the taxable part of the non-qualified SPIA.
The Tax Court recently ruled that a taxpayer was subject to a 10 percent penalty tax when he took a premature distribution from his qualified retirement plan in order to make alimony payments to his ex-wife pursuant to a family judge's order because the payments were not made pursuant to a qualified domestic relations order ("QDRO").
I can understand a penalty tax for someone who is single and remaining in a three or four-bed property, but why is there a need to tax a tenant for having just one spare bedroom?
Its additional tax payments, including a penalty tax, are estimated at 300 million yen, the sources said.
Under the most significant generally applicable exception, the 10% penalty tax will not apply to any distributions on or after the date the taxpayer reaches age 59 1/2.
If a taxpayer is under 59 1/2 years old, IRC [section] 72(t) generally imposes an additional penalty tax of 10% on withdrawals.
This transfer will not be included in the individuals income, nor will it be subject to the 10-percent penalty tax for premature withdrawals.
Exceptions to the penalty tax include distributions: (1) made on or after death; (2) attributable to disability; (3) that are part of a series of substantially equal periodic payments made (at least annually) for the life or life expectancy of the individual or the joint lives or joint life expectancy of the individual and a designated beneficiary (e.