Some people take an early withdrawal from their IRA or retirement plan. Doing so in many cases triggers an added tax on top of the income tax you may have to pay. Here are some key points you should know about taking an early distribution:
1. Early Withdrawals. An early withdrawal normally means taking the money out of your retirement plan before you reach age 59½.
2. Additional Tax. If you took an early withdrawal from a plan last year, you must report it to the IRS. You may have to pay income tax on the amount you took out. If it was an early withdrawal, you may have to pay an added 10 percent tax.
3. Nontaxable Withdrawals. The added 10 percent tax does not apply to nontaxable Read more