Tax Rules on Early Withdrawals from Retirement Plans
IRS Tax Tip 2013-35
Taking money out early from your retirement plan
can cost you an extra 10 percent in taxes. Here are five things you should know about early withdrawals from retirement plans.
- An early withdrawal normally means taking money from your plan, such as a 401(k), before you reach age 59½.
- You must report the amount you withdrew from your retirement plan to the IRS as taxable income. You may have to pay an additional 10 percent tax on your withdrawal.
- The additional 10 percent tax normally does not apply to nontaxable...
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Although half of Americans consider retirement a top priority, 58% do not have a formal retirement income and savings plan, according to a report released by Deloitte.
Harris Interactive surveyed nearly 4,500 Americans over 26 on behalf of Deloitte Center for Financial Services and found that although just 30% say they feel “very secure” in their retirement prospects, those with a plan were four times more likely to feel secure. What’s troubling, though, is that many people are convinced that no matter how much they save, it won’t be enough.
“People used to think about retirement as a straight-line plan to a...
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