SEP IRA Withdrawal
I just want t0 make that if a 62 year old starts a SEP IRA and wants to withdraw some 7 months later, that there will be no penalty. I don’t think that there would be, but there is that 2 year rule that I think only applies to SIMPLE IRAs and not SEP’s.
1. Is there any penalty for withdrawing from a SEP IRA 7 months after starting?
2.If it were a SIMPLE IRA instead would there be a penalty for a 62 year old?
Thanks,
Lee
Permalink Submitted by Alan Spross on Thu, 2011-03-10 01:20
No penalty for the SEP IRA distribution, just ordinary taxes.
For a SIMPLE IRA, it is basically the same for distributions since the early withdrawal penalty of 25% in the first two years does not apply after 59.5.
Where you have a difference is when the the taxpayer wants to do a rollover. The SEP IRA distribution can be rolled over, but the SIMPLE IRA distribution within first 2 years is not eligible for rollover and is therefore taxable and removed from retirement plans, UNLESS the distribution is rolled over to another SIMPLE IRA.