Penalty tax

(redirected from Withdrawal Penalties)

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 ?
Using retirement savings to cover an emergency is a permanent setback to retirement planning, with the possibility of taxable distributions, early withdrawal penalties, loss of tax efficiency, and the inability to replace withdrawn funds in future years," said Greg McBride, CFA, Bankrate.
With so much discussion about when the Fed will raise interest rates, many cooperatives that offer share certificates-what the credit union world calls CDs-are wondering how long they should lock in rates and looking closely (at policies related to early withdrawal penalties.
Of course, we all know that the 401(k) rollover is ideal because it allows them to transfer their existing retirement account into another retirement account (usually a low-risk portfolio) without being subject to unnecessary taxes or withdrawal penalties.
Once again, there are possible tax consequences and early withdrawal penalties one needs to be aware of when taking money from any qualified retirement account or fund.
This is often a very attractive option as payments are lower initially, but consideration should be given to arrangement fees; tie in periods and any associated withdrawal penalties.
But Paige Capital is defending the action and accused Mr Lerner of trying to avoid massive early withdrawal penalties.
Doing this, commonly called a trustee to trustee transfer, keeps your money from getting hit by early withdrawal penalties and taxes.
For ordinary bank accounts, this should normally present the taxpayer with no difficulty, but direct deposits into tax-favored accounts may cause a problem because such accounts usually have early withdrawal penalties attached to them.
Examples of such products include both fixed and variable deferred annuities with surrender charges and long-term bank certificates of deposit with early withdrawal penalties.
The best interest currently available on an account with no withdrawal penalties, short-term bonuses or other strings attached is 5.
ING Direct chief executive, Lindsay Sinclair said: "For obvious reasons, savings providers don't draw your attention to withdrawal penalties when they sign you up.
My only hesitation is that I do not know how close to retirement you are, or what withdrawal penalties you might face.