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I haven't read up on this because I am over 59.5, but if I remember correctly, if you take money out of a traditional IRA early, that is before 59.5, you need to pay ALL the taxes at that point, PLUS a penalty. So that "up to 10% penalty" the OP is asking about does not include the actual taxes, which are due to both the state and to the federal entity. And all the taxes means that that money now becomes income for the year you take it out, which means the released IRA dollars get added to any other income you have that year, which means it probably puts you in a higher tax bracket as well.
where did you say you are taking out the funds for one of the exempt reasons ?
there is no 5 year waiting period on ira's .
It should have been perfectly clear from the beginning:
From my original post:
So, say if one wanted to draw funds (either principal OR earnings or principal AND earnings) from an IRA after only a few years after it was contributed for a listed exception (therefore not incurring the 10% penalty but obviously counting as income & taxed upon w/d) would that be prohibited? If so, where is that stated?
2nd post:
as long as they meet one of the exceptions clearly stated in IRS rules. Look on page 24 of IRS pub 590 B where it lists the valid exceptions where you can withdraw if you're under age 59 1/2 and also would not incur any 10% penalty.
3rd post:
while mentioning the usual caveats of withdrawal (but which would not be an issue if using for an IRA allowed exceptions .....other than ordinary tax which is already understood).
Last edited by luckyram; 02-25-2016 at 09:27 AM..
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