For awhile now, you’ve been saving diligently to fund your retirement, but now you need some cash to cover expenses right now. Can you “Touch” your money without incurring the tax wrath of Uncle Sam? In some instances, the answer is yes.
The tax laws governing early distributions are toughest when it comes to traditional IRAs, but they also apply, albeit slightly differently, to Roth accounts. For both types of retirement plans, the IRS generally considers IRA withdrawals made before you reach age 59 1/2 as premature distributions. In addition to owing any tax that might be due on the money, you could face up to a 10 percent penalty charge on the amount withdrawn.
But in certain cases when the good old IRS says it’s OK to use your retirement savings early.
Two popular, penalty-free withdrawal circumstances are when you’re utilizing the IRA money to pay for higher-education expenses or help with the ability to purchase your first home.
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