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Tax.appeal.168
Tax.appeal.168, Tax Accountant
Category: Tax
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Experience:  Nearly 30 years of varied tax industry exp. Tax Biz owner
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I need to take an early withdrawal from an IRA. I am 54 years

Resolved Question:

I need to take an early withdrawal from an IRA. I am 54 years old. I have a Roth and a traditional IRA - is one better for early withdrawal than another?
Submitted: 1 year ago.
Category: Tax
Expert:  Tax.appeal.168 replied 1 year ago.
Welcome. THANK YOU for choosing Just Answer. My name is XXXXX XXXXX my goal is to help make YOUR life, a little...LESS taxing.

Unless certain exceptions apply, there are minimum age requirements for both, that age requirement is 59-1/2 years old. Since you are not 59-1/2 years old, and if you don't meet one of the exceptions, there will be a 10% early withdrawal penalty that will apply. Now, as for which one is better to withdraw from, this depends. In all cases, when a person makes a withdrawal from a traditional IRA, the distribution amount is taxed as ordinary income. With a Roth IRA, whether the distribution amount will be taxed as ordinary income will depend upon whether the distribution from the Roth IRA is considered a qualified or a non-qualified distribution. If the distribution is considered qualified, then the distributed amount will be tax free (keep in mind there will still be the 10% penalty unless an exception applies). On the other hand, if the distribution amount is considered non-qualified, the distributed amount will be taxed as ordinary income, plus the 10% penalty, as with the traditional IRA. For an easier read on what I have just written, you can refer to the following link;

https://www.fidelity.com/retirement-planning/learn-about-iras/ira-withdrawal

You can also refer to the IRS Pub 590;

http://www.irs.gov/publications/p590/ch02.html

Please let me know if I can be of further assistance to you regarding this matter.

Thank you again for using JUST ANSWER.

Tax.appeal.168, Tax Accountant
Category: Tax
Satisfied Customers: 2495
Experience: Nearly 30 years of varied tax industry exp. Tax Biz owner
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