What are the penalties for withdrawing from my Traditional IRA less than a year after acquisition?

By Denise Appleby AAA
A:

Withdrawals from your Traditional IRA will be treated as ordinary income, and if you are under age 59.5 when the distribution occurs, the amount will be subject to an early-withdrawal penalty of 10% (of the amount withdrawn). The amount will be exempted from the early-withdrawal penalty if you meet one of the following exceptions:

-You plan to use the distribution towards the purchase or rebuilding of a first home for yourself or a qualified family member (limited to $10,000 per lifetime).
-You become disabled before the distribution occurs.
-Your beneficiary receives the assets after your death.
-You use the assets for medical expenses for which you were not reimbursed.*
-Your distribution is part of a SEPP program.
-You use the assets for higher-education expenses.*
-You use the assets to pay for medical insurance after you lose your job.*
-The assets are distributed as a result of an IRS levy.
-The amount distributed is a return on non-deductible contributions.

* Limitations apply

(For related reading, see Avoiding IRS Penalties On Your IRA Assets.)

This question was answered by Denise Appleby.

RELATED FAQS

  1. What is the relationship between minority interest discount and fair market value?

    Learn how to determine the fair market value and minority interest discount for the sale of a share of a closely held corporation.
  2. What are some ways of financing an acquisition?

    Learn about how business acquisitions are financed, from using private equity funds to receiving huge acquisition loans from ...
  3. Why would a company want to do an acquisition of another company?

    Review some of the reasons why business acquisitions take place, and how the acquiring company is looking to benefit from ...
  4. What was the largest company Warren Buffett ever bought through Berkshire Hathaway?

    Explore Warren Buffet's rationale for the record setting Berkshire Hathaway acquisition of the Burlington Northern Santa ...
RELATED TERMS
  1. Senior Move Manager

    Senior move managers (SMMs) help seniors downsize and relocate ...
  2. Asset Valuation Review (AVR)

    A process that establishes an estimate of the value of a failed ...
  3. Assisted Merger

    The merger of two or more financial institutions undertaken with ...
  4. Assuming Institution

    A healthy financial institution that purchases the assets of ...
  5. Acquisition

    A corporate action in which a company buys most, if not all, ...
  6. Elder Care

    Elder care, sometimes called elderly care, refers to services ...

You May Also Like

Related Articles
  1. Investing

    Facebook's Most Important Acquisitions

  2. Professionals

    Why Retirement Advice Is Better But ...

  3. Professionals

    Coming Soon: Private Equity In 401(k) ...

  4. Stock Analysis

    Breaking Down the Halliburton Baker ...

  5. Professionals

    Ways To Cut 401(k) Expenses

Trading Center