Early Withdrawals from Retirement Plans by theyne


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									 IRS Tax Tips                                                                     March 18, 2013

Useful Links:                Issue Number: IRS Tax Tip 2013-35
IRS.gov Home                 Inside This Issue
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                                  Tax Rules on Early Withdrawals from
                                            Retirement Plans
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                             Taking money out early from your retirement plan can cost you an
What's Hot                   extra 10 percent in taxes. Here are five things you should know about
                             early withdrawals from retirement plans.
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                             1. An early withdrawal normally means taking money from your plan,
IRS - The Basics             such as a 401(k), before you reach age 59½.

IRS Guidance                 2. You must report the amount you withdrew from your retirement
                             plan to the IRS. You may have to pay an additional 10 percent tax on
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                             your withdrawal.
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                             3. The additional 10 percent tax normally does not apply to nontaxable
Problem Alerts               withdrawals. Nontaxable withdrawals include withdrawals of your cost
                             in participating in the plan. Your cost includes contributions that you
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e-News Subscriptions         4. If you transfer a withdrawal from one qualified retirement plan to
                             another within 60 days, the transfer is a rollover. Rollovers are not
                             subject to income tax. The added 10 percent tax also does not apply to
                             a rollover.
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                             5. There are several other exceptions to the additional 10 percent tax.
Tax Tips 2013                These include withdrawals if you have certain medical expenses or if
                             you are disabled. Some of the exceptions for retirement plans are
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                             different from the rules for IRAs.
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                             For more information on early distributions from retirement plans, see
Armed Forces                 IRS Publication 575, Pension and Annuity Income. Also, see IRS
                             Publication 590, Individual Retirement Arrangements (IRAs). Both
Disaster Relief              publications are available at IRS.gov or by calling 800-TAX-FORM
Scams / Consumer Alerts         (800-829-3676).
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                                Additional IRS Resources:

                                      Publication 575, Pension and Annuity Income
IRS Resources                         Publication 590, Individual Retirement Arrangements (IRAs)
                                      Form 5329, Additional Taxes on Qualified Plans (Including
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                                       IRAs) and Other Tax-Favored Accounts
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