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Because fed and state tax, If I withdraw 200 grand to settle

Customer Question

Because fed and state tax, If I withdraw 200 grand to settle bankruptcy trustee, do I face anther tax problem ? Is there penalty for withdrawing from Ira?
Submitted: 1 year ago.
Category: Tax
Expert:  emc011075 replied 1 year ago.

Hi. My name is ***** ***** I will be happy to help you.

If you are younger than 59 1/2 you will have to pay income tax + 10% penalty for early distribution. There are some exceptions to the penalty, but not the income tax.

Please, do not shoot the messenger, unfortunately, bankruptcy or paying income tax is not one of the exceptions. The only exception in your case would apply if IRS levy your IRA account. But have a look at the table, you may find another exception that would qualify.

https://www.irs.gov/Retirement-Plans/Plan-Participant,-Employee/Retirement-Topics---Tax-on-Early-Distributions

Expert:  emc011075 replied 1 year ago.

I see you read my respond. Do you have any questions? Is there anything else I can help you with today?

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