IRA early withdrawal penatly exceptions
A client says they read in an IRS publication that “insolvency” is allowable as an exclusion from the 10% early withdrawal penalty on IRA distributions under age 59-1/2. Has anyone heard of this? If so, what is the definition of insolvent?
Permalink Submitted by Alan - IRA critic on Fri, 2013-04-19 18:28
There is no insolvency exception to the penalty. The closest exclusion to that is the IRS levy exclusion. Here is a chart showing all penalty exceptions. http://www.irs.gov/pub/irs-pdf/p5036.pdf