General
3 articles
What is the penalty for early distribution?
Taking money from a retirement plan before age 59½ triggers a 10% early withdrawal penalty on top of ordinary income taxes. Exceptions exist, and they vary depending on whether you have an IRA or a Solo 401(k). Why the IRS imposes the penalty The IRS ...
What are Required Minimum Distributions (RMDs)?
Required Minimum Distributions are annual withdrawals the IRS requires you to take from certain retirement accounts once you reach a specified age. They exist because most retirement accounts were funded with pre-tax dollars, and the IRS eventually ...
What is the penalty for failure to take RMDs?
If you fail to take a Required Minimum Distribution by the applicable deadline, the IRS imposes a 25% excise tax on the amount you should have withdrawn but did not. That shortfall is also subject to ordinary income tax, since the distribution itself ...