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| What are the penalties for withdrawing from my Traditional IRA less than a year after acquisition? |
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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age 59.5 when the distribution occurs, the amount will be subject to an early-withdrawal penalty of 10% (of the amount withdrawn).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.
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