10 Ways to Avoid the 10% Early Retirement Withdrawal Penalty
Posted by financialadviser on October 24th, 2018
If you have any type of tax advantaged retirement account such as an IRA, Roth IRA, 401(k) or annuity, you are not able to take withdrawals prior to age 59 ½ without incurring a 10% early withdrawal penalty. What most people don’t know is that there are ten ways that this penalty can be avoided. Check with your tax professional or financial advisor to make sure that you execute these strategies appropriately so that you don’t incur the penalty plus interest that can be charged to you when this is done incorrectly. Here is the list of ten ways you can avoid the early withdrawal penalty.
Of course no one plans for the tenth way to avoid the ten percent penalty but in the unfortunate event that someone does die before needing their retirement funds, the penalty will be avoided.
In addition to these strategies, you can also take loans out of your account without penalty to pay for many things including down payments on a house or pay down debt. As you repay back the loan, the principal and interest is paid back to your account. This is another creative way to not only make returns on your account but avoid penalties from early use of the money.
Disclaimer: Please seek professional advice regarding tax liability and investing options based on your personal situation.Also See: Withdrawal Penalty, 401 K, Early Withdrawal, Ten Ways, Penalty, Ira, Retirement
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