And some are so confident that they are taking money out -- despite it being taxed and potentially hit by an early-withdrawal penalty
-- assuming it will be replaced as markets continue to surge upward.
It is not that you won't be able to access it, but you likely will have to pay an early-withdrawal penalty
if you do.
A retirement plan from an old employer generally can be rolled over to an IRA, from which distributions for a first-time home purchase (up to $10,000) are not subject to the early-withdrawal penalty
To ensure that the IRS knows that the amount is not subjected to the early-withdrawal penalty
, your IRA custodian/trustee should report the withdrawn amounts as death distributions.
Deposits that are subject to an early-withdrawal penalty
of at least 50 percent of accrued interest can be treated as 'qualifying term funding,' or money that can be lent out, with effect from June 1.
Immediately after a layoff, you might be tempted to take out a no-penalty withdrawal from your 401(k) (no-penalty withdrawals are not subject to the 10% early-withdrawal penalty
, and can be taken out for special circumstances such as a layoff or permanent disability), but it's still taxable income, says Perez.
For people with disabilities, the 10% early-withdrawal penalty
Some in their 50s are heading for the exits even before they turn 59 1/2, the age at which they're eligible to access the funds in their IRAs and company retirement plans without paying an early-withdrawal penalty
However, any amount withdrawn before the taxpayer reaches the age of 59 1/2 is subject to applicable income taxes, plus a 10 percent early-withdrawal penalty
To encourage employees to participate as much as possible, many companies adopt loan provisions, which allow participants to borrow part of their retirement money without incurring an early-withdrawal penalty
The act provides that the 10 percent early-withdrawal penalty
does not apply to distributions from traditional IRAs if the taxpayer used the amounts to pay qualified higher education expenses or are used to pay expenses paid by a qualified first-time home buyer.
If you are under age 59 1/2, you may also have to pay the IRS a 10% early-withdrawal penalty