Even if the distribution is not "qualified," it may escape the usual 10% early withdrawal penalty
if it satisfies one of the exceptions for traditional IRAs, which are medical insurance premiums, educational expenses and first-time homebuyer expenses.
It concluded that he had "initiated, received, and controlled the withdrawals." The Court also found Czepiel liable for the 10% early withdrawal penalty
Withdrawals made during this phase from any qualified retirement plan, including IRAs, are subject to a non-deductible 10% early withdrawal penalty
. This is in addition to the regular income tax that must be paid whenever there are withdrawals from qualified plans.
* If a distribution is taken from a qualified plan before age 55, there will be a 10% early withdrawal penalty
, but only on its cost basis.
The 10% IRA withdrawal penalty
does not apply to converted funds, but any withdrawal the taxpayer takes to pay the taxes due at conversion will be subject to the penalty.
Second, the IRA exceptions to the 10% premature withdrawal penalty
tax do not include early retirement, medical expenses, and ESOP distributions.
Nonqualifying distributions from a Roth IRA are not exempt from the early withdrawal penalty
. The early withdrawal penalty
is 10% of the distribution required to be included in the taxpayer's gross income.
Although income tax will be owed on the amount withdrawn, the taxpayer will not be subject to the 10% early withdrawal penalty
when amounts are withdrawn before the account holder reaches age 59 1/2.
Dwyer reported the IRA withdrawal on his tax return but did not pay the 10% premature withdrawal penalty
72(t)(1) early withdrawal penalty
when distributed from the IRA; however, the earnings thereon will be subject to that penalty when distributed from the IRA.