Penalty Free Ira Withdrawals

Written by Johnny Kitchens
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Investors are often under the misconception that their IRAs must be kept in a glass case that can only be broken upon retirement or at the age of 70, whichever comes later. The fact is that at the age of 70, you must begin taking at least minimum distributions from your IRA. This can also vary depending on the type of IRA you have. The rules are very different for traditional IRAs, Roth IRAs, SIMPLE IRAs and other retirement plans.

Penalties are tied to the IRA owner's age, the age of the IRA, the length of time funds have been in the IRA, and where the funds are going. The rules are laid out by the IRS in a number of publications. Publication 590 concerns Individual Retirement Arrangements (IRAs) and Roth IRAs and has an extensive section on prohibited transactions and penalties. Publication 560 covers other retirement plans and other publications go into more detail regarding retirement plans of all types.

The penalty for most early withdrawals is 10 percent of the amount of the withdrawal. Other penalties can be levied for a large number of reasons having to do with prohibited transactions, transactions with disallowed persons, and ignoring the proper protocols for transactions. It is only possible to make early withdrawals without a penalty if certain strict criteria have been met. To see where you stand in this regard, you need to speak with an experienced professional about your particular situation.

Finding a Good IRA Advisor

There is a vast number of IRA advisors who would be willing to talk to you, handle your account, and collect their fees. The number of advisors that are right for your investment style and are qualified to take you from where you are to where you want to go is considerably smaller. Many advisors only know of a few paths to take and they guide every client down the same ones. Other advisors employ tax specialists, real estate specialists, and all of their knowledge and experience to find out where their clients want to go and how to best get them there.


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