10 percent penalty

5 Things You Can Do With a 401(k) That You Can’t With an IRA

401(k)s and IRAs share a lot of similarities. They are both retirement plans. They both can help you lower your tax bill today, provide tax-deferred growth and can help provide an income source in retirement. That said, there are also many differences between the two types of retirement accounts. Some are relatively insignificant and probably won’t impact your planning or decision-making process, but other differences can make one type of account far superior to the other in your particular situation. With that in mind, we explore 5 things you can do with a 401(k) that you can’t do with an IRA.

10 Rules to Know About 72(t)

Are you under age 59 ½ and looking to access your IRA funds without being hit with the 10% early distribution penalty? Taking substantially equal periodic payments, or “72(t)” payments as they are sometimes called, from your IRA may be an option for you. With 72(t) payments, you can take early distributions from your IRA and avoid a penalty. Sound too good to be true? Well, these payments are subject to many strict rules. You should understand the restrictions before you jump in. Here are 10 rules you should know about 72(t) payments before you decide that they are the answer for you.

Can I Convert Funds From an IRA to a Roth IRA Before Age 59 1/2?

It's time for another edition of The Slott Report Mailbag, where we answer a parent's question on whether her son's Roth IRA contributions were done within the rules, assess whether an IRA account can be converted to a Roth IRA before age 59 ½ and examine an employee's pro-rata complexities with moving after-tax 401(k) funds to both a traditional and Roth IRA.

Extenders Bill Poised To Make Big Changes: What You Need to Know

It’s taken almost a full year – literally – but Congress is finally set to pass an appropriations act, which will include the much anticipated extenders bill. However, this isn’t your run-of-the-mill extenders bill. This year’s version of the extenders bill permanently extends several key tax provisions, including the QCD (Qualified Charitable Distribution) provision that allows certain IRA owners to give IRA funds directly to charity without having to include them in income. Stuffed into the bill under a section appropriately titled “Miscellaneous Provisions” are several other changes to the tax law – that have nothing to do with the extenders – but that may impact your planning for one or more reasons. The following is a brief summary of some of the most important provisions in the law.

Tapping an IRA to Pay Education Expenses? Avoid These 4 Mistakes

Are you facing big college tuition bills? Generally, if you take a taxable distribution from your IRA before you reach age 59 ½, you will be subject to an additional 10% early distribution penalty. However, an exception to the penalty allows you to take a penalty-free distribution from your IRA if you use the funds for qualified higher education expenses. If you decide to tap your IRA early in order to pay for education costs, you will want to avoid these four mistakes that others have made.

10 Things You Should Know About the 10% Early Distribution Penalty and IRAs

IRAs are designed to be used for retirement savings. Ideally, to maximize the benefits of these accounts, you should not touch these funds before reaching retirement age. However, in the real world, you may need money and consider tapping your IRA earlier. If you do, you should be aware of the 10% early distribution penalty. This penalty is assessed on early distributions from IRAs, in addition to any taxes you may owe. Here are ten things you should know about the 10% early distribution penalty and IRAs.

No Exception to Early Distribution Penalty for Financial Hardship

When you encounter tough economic times, you may be tempted to tap your retirement plan. If you are considering this, you will want to proceed carefully. If you are under age 59 ½, any distributions you take may be taxable and also subject to the 10% early distribution penalty. Whether or not there is an exception to the penalty for financial hardship is a common misconception.

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