Comments on: No Penalty IRA/401k Hardship Withdrawls http://blog.t3consortium.com/nopenaltyirawithdrawls/ Brain Dumps for Consumption Mon, 12 Dec 2011 19:31:48 +0000 hourly 1 http://wordpress.org/?v=3.3.1 By: Dave S http://blog.t3consortium.com/nopenaltyirawithdrawls/comment-page-1/#comment-4528 Dave S Tue, 10 May 2011 16:52:23 +0000 http://blog.t3consortium.com/?p=831#comment-4528 UPDATE – Penalty Hardship Withdrawal - Free IRA withdrawal to pay IRS – If Uncle Sam comes after your IRA for unpaid taxes, or in other words, places a levy against the account, you can take a penalty-free withdrawal. You also can't make any contributions to your IRA for six months after a hardship withdrawal. Although the penalty tax is waived, hardship withdrawals must be reported as ordinary income on your income tax return. Early Distributions You must include early distributions of taxable amounts from your traditional IRA in your gross income. Early distributions are also subject to an additional 10% tax, as discussed later. Early distributions defined. Early distributions generally are amounts distributed from your traditional IRA account or annuity before you are age 59½, or amounts you receive when you cash in retirement bonds before you are age 59½. Age 59½ Rule Generally, if you are under age 59½, you must pay a 10% additional tax on the distribution of any assets (money or other property) from your traditional IRA. Distributions before you are age 59½ are called early distributions. The 10% additional tax applies to the part of the distribution that you have to include in gross income. It is in addition to any regular income tax on that amount. A number of exceptions to this rule are discussed later under Exceptions. Also see Contributions Returned Before Due Date of Return , earlier. For a list of eligible early withdrawals without the 10% penalty visit: http://www.irs.gov/publications/p590/ch01.html#en_US_2010_publink1000230896 Exceptions There are several exceptions to the age 59½ rule. Even if you receive a distribution before you are age 59½, you may not have to pay the 10% additional tax if you are in one of the following situations. • You have unreimbursed medical expenses that are more than 7.5% of your adjusted gross income. • The distributions are not more than the cost of your medical insurance. • You are disabled. • You are the beneficiary of a deceased IRA owner. • You are receiving distributions in the form of an annuity. • The distributions are not more than your qualified higher education expenses. • You use the distributions to buy, build, or rebuild a first home. • The distribution is due to an IRS levy of the qualified plan. • The distribution is a qualified reservist distribution. UPDATE –
Penalty Hardship Withdrawal – Free IRA withdrawal to pay IRS –

If Uncle Sam comes after your IRA for unpaid taxes, or in other words, places a levy against the account, you can take a penalty-free withdrawal.

You also can’t make any contributions to your IRA for six months after a hardship withdrawal. Although the penalty tax is waived, hardship withdrawals must be reported as ordinary income on your income tax return.
Early Distributions

You must include early distributions of taxable amounts from your traditional IRA in your gross income. Early distributions are also subject to an additional 10% tax, as discussed later.
Early distributions defined. Early distributions generally are amounts distributed from your traditional IRA account or annuity before you are age 59½, or amounts you receive when you cash in retirement bonds before you are age 59½.

Age 59½ Rule

Generally, if you are under age 59½, you must pay a 10% additional tax on the distribution of any assets (money or other property) from your traditional IRA. Distributions before you are age 59½ are called early distributions.
The 10% additional tax applies to the part of the distribution that you have to include in gross income. It is in addition to any regular income tax on that amount.

A number of exceptions to this rule are discussed later under Exceptions. Also see Contributions Returned Before Due Date of Return , earlier.
For a list of eligible early withdrawals without the 10% penalty visit:
http://www.irs.gov/publications/p590/ch01.html#en_US_2010_publink1000230896
Exceptions
There are several exceptions to the age 59½ rule. Even if you receive a distribution before you are age 59½, you may not have to pay the 10% additional tax if you are in one of the following situations.
• You have unreimbursed medical expenses that are more than 7.5% of your adjusted gross income.
• The distributions are not more than the cost of your medical insurance.
• You are disabled.
• You are the beneficiary of a deceased IRA owner.
• You are receiving distributions in the form of an annuity.
• The distributions are not more than your qualified higher education expenses.
• You use the distributions to buy, build, or rebuild a first home.
• The distribution is due to an IRS levy of the qualified plan.
• The distribution is a qualified reservist distribution.

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