Did you know, most distributions from a retirement plan (e.g. 401(k), 403(b), 457, etc.) are subject to income tax and may be subject to an additional 10% “penalty” tax?
Generally, the amount(s) an individual withdraws from an IRA or retirement plan before reaching age 59 and ½ are called ”early” or ”premature” distributions. Individuals must pay an additional 10% early withdrawal tax on these distributions unless an exception applies. Ideally, you want to take a withdrawal that is not subject to this additional tax.
If this sounds like it applies to you check out these next steps:
- Utilize the IRS’ online interview tool to determine if your retirement plan distribution is subject to additional taxation.
- Contact Leading Retirement Solutions at service@leadingretirement.com; we can help you determine if your retirement plan distribution is subject to additional taxation.
- Ask your Accountant or tax return preparer if your retirement plan distribution is subject to additional taxation.
- Check out additional information at the IRS.gov website.
If you have any further questions regarding Additional Taxes or Retirement Savings, feel free to reach out to us. We’d be more than happy to answer your questions.
For more tips and information regarding retirement plans, contact us.
