We usually don’t advise you to begin taking early withdrawals from your qualified retirement plans and IRAs. Not only does this erode the nest egg you’ve diligently built for retirement, you typically will also be hit with a 10% premature withdrawal penalty tax on top of the regular income you will owe if you take withdrawals before age 59½.
But you may be facing a cash crunch during this recession with no other alternative.
Strategy: Minimize the tax damage. If you qualify under one of the special tax law exceptions, you don’t have to pay the usual 10% penalty—even if you’re nowhere close to 59½ years old. (Regular income tax still applies.)
The rules differ slightly for qualified plans and IRAs, but here are five ways to get your hands on the cash.
1. Take separate but equal payments
No penalty will be assessed if you arrange to receive “substantially equal periodic payments” (SEPPs) from a qualified pl...(register to read more)
- How to Fire an Employee the Legal Way: 6 Termination Guidelines
- Small Business Tax Deduction Strategies
- Tax fallout from partnership breakup
- Depreciation deductions recaptured on home sale
- No unemployment after quitting to take job that never happened
- Beyond withholding: Payroll's many compliance duties