Think about this, you nor can you take it with you anywhere, so what would be the best way to handle this? Well, what you need to do is to make sure that you are aware of the different IRA withdrawal rules that you need to meet. Taking money from your IRA funds at any time is not possible without penalty. Now, taking money from your IRA self directed account is the only time when you will be taxed for the money and the properties and investment that you have. You also have to take note that withdrawal rules and even penalties will be based on your age.
IRA Withdrawal Rules: Withdrawing from Your IRA at Age 59 Years and Below
According to the IRA withdrawal rules, your deductible earnings, dividends, interests, capital gains, interests, and contributions will be taxed and considered as ordinary sources of income. Now, if you decide to withdraw from your IRA account before the allowed age, the IRS will charge a 10% penalty based on the traditional IRA policy. There are, of course, some exceptions to the rule, here are examples that you may want to know more about:
- Educational expenses – you may not get charged for the use of your IRA funds for personal education and eligible members of your immediate family, as long as certain requirements are met
- Purchasing a home for the first time – this is not a done deal for all first-time home purchases since there are rules that should be followed in order to be exempted from a penalty fee. Check with your custodian to ask if you will be covered.
- Disability or sudden death – now, if you have a pre-existing disability or have been disabled, you will not be charged with a penalty fee. Your beneficiaries will not be penalized for withdrawing money from your IRA account in case of your death.
- Medical expenses – unreimbursed medical payments that are not more than 7.5% of your own gross income can be used as a reason for not being penalized for withdrawing your funds early.
Age 59 ½ to 70 Years
There are no withdrawal restrictions for withdrawing funds from your personal IRA. Your deductible contributions will also be considered as your ordinary means of income, thus will be taxed accordingly.
70 ½ Years and Above
Whether you like it or not, IRA withdrawal rules state that it is deemed mandatory for you to start cashing in on your acquired assets through your IRA. In case of failure to withdraw, then you will be charged with a penalty fee amounting to half of what you have supposedly withdrawn.
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