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The early withdrawal penalty, also called the early distribution rule is a 10% federal tax that is applied to withdrawals made before age 59-1/2. 10% of $20,000 = $2,000. There are exceptions whereas you may not have to pay the 10% penalty.
You are using the withdrawal to pay for:
unreimbursed medical expenses in excess of 7.5 of your adjusted gross income;
health insurance premiums for you, your spouse or dependents during a year in which
you collected unemployment benefits for more than 12 consecutive weeks;
qualified higher education expenses for you, your spouse, dependents, grandchildren;
unpaid federal income tax liability levied by the IRS;
you make a qualifying rollover;
you are receiving the funds due to a qualifying disability;
I will get back with you shortly with the amount for the state of CT. Thank you.
In some cases there is the additional 10% penalty, and not all states have tax implications for early withdrawal. Researching the matter, I did not find any info regarding a state implication, or the additional 10% penalty. However, let's say there is the additional 10%. You would be looking at 20% which will total $4,000.
What type of IRA is it? Is it a Roth or traditional IRA?
As far as the taxes, you must include the $20,000 as income. So you will add the $20,000 to any other income and it will be taxed at the same rate your income is taxed at.
You will receive a Form 1099-R from the company that manages your IRA account. Looks similar to a W-2. This form will show the distribution amt. which is $20,000. The form also shows the distribution code. Since it's an early distribution, code 1 will show in box 7 of the 1099R. Again this money will be considered as income to you and taxed as such.
I will check on the particulars and get back with you.