1. Money

Discuss in my forum

William Perez

Early Withdrawal from Retirement Plans

By July 2, 2005

Follow me on:

If you are thinking about withdrawing money from your retirement plan and you are under 59 and a half years old, you should think twice before withdrawing that money. First of all, you will need to include that withdrawal as part of your taxable income. Secondly, you will have to pay an additional 10% tax on the early withdrawal. There are several exceptions to the early distribution penalty, so find out if you qualify for an exception before you withdraw the money.
Comments
May 12, 2006 at 12:09 am
(1) R.Silver says:

how do i find out if im qulified

May 12, 2006 at 11:03 am
(2) taxes says:

Simply go to my article on the Early Distribution Penalty and read about the exemptions for the 10% early distribution tax penalty.

October 21, 2008 at 10:26 am
(3) RK says:

I am about to leave the country after living here on a work visa for 6 years. For the last 4 years I contributed to an ORP that I thought I could transfer to an overseas account when I finally left… however I’m told that this will not be able to happen and I am forced to leave the ORP where it is until retirement or withdraw. Is there a smart way to withdraw? Do I have them withhold state and federal taxes? or should I simply withdraw it all and have a professional work it out in my own country when I’m back?

November 1, 2008 at 4:49 pm
(4) taxes says:

RK, you’ll need to contact your ORP plan administrator for additional details. It sounds like this is a type of pension or other group retirement plan sponsored by your employer. Such plans usually have similar rules as 401k plans, but there are important differences. You may be able to rollover the funds into an IRA. That will enable you to have control over where your money is invested and would preserve the tax deferral feature of your savings.

March 16, 2009 at 4:43 pm
(5) Cellular says:

At the end you might be probably better off with 10% penalty than having your money pay for their bonuses.

March 24, 2009 at 11:51 am
(6) DRV says:

I need an early withdrawal from IRA and don’t qualify for any exceptions. I know I will owe taxes on earnings, but can I ever recover the additional 10% penalty and how?

March 31, 2010 at 2:45 pm
(7) kp says:

I was forced into early retirement at age 51 by my employer after 31 years and given a lump sum amount. This was all based on my pensionable earnings. I paid a mandotory 20% in federal taxes. Is it true that I also will be assessed a 10% penalty for early withdrawal when it was not my choice?

My 401k is still in tact.

April 15, 2010 at 12:18 pm
(8) james campbell says:

Several years ago i withdrew a profit sharing plan from my company when i left after new owners took over. Since it was considered a retirement plan i was socked with taxes, penalties and then taxes again at the end of the year. It cost me $54,000 in taxes that year. That is not fair. The government wants everyone to have a pension plan where they work .That was money i really needed and now that they took it im in financial distress. I think the government is only interested in getting as much money as they can from anyone they can. Needless to say i am not very happy at this time of year with having to pay taxes like that.

May 11, 2010 at 7:38 am
(9) Joe says:

I am 48, close to foreclosure, I have a Teamster pension. Can I withdrawal my funds now.

November 23, 2010 at 7:47 pm
(10) Lloyd says:

After 16 years in the Teamsters I left for a nonuioun job
My pension is froze,Is there any way to move it to a IRA or somthing.I would like too put it to work instead of the Teamaters colecting intrest on it

Leave a Comment

Line and paragraph breaks are automatic. Some HTML allowed: <a href="" title="">, <b>, <i>, <strike>

©2014 About.com. All rights reserved.