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Ask Mark Taylor Your Own Question
Mark Taylor
Mark Taylor, Certified Public Accountant (CPA)
Category: Tax
Satisfied Customers: 1608
Experience:  Certified Public Accountant
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Thank you for assistance. I am interested in further

Customer Question

Hello!
JA: Hello. What do you want help with?
Customer: Thank you for assistance. I am interested in further information about hardship withdrawals from a Traditional IRA that is the result of a 401K rollover. My specific situation is as follows:
JA: The Accountant will know how to help. Please tell me more, so we can help you best.
Customer: I'm 55 years old and have been unemployed as the result of a layoff six months ago. My previous employer's 401K plan was rolled over into an IRA account with the same brokerage firm that managed the 401K. My understanding is that it is at least theoretically possible to withdraw funds from either a 401K or an IRA under hardship conditions as someone who has turned 55 in the same year as having been separated/terminated from employment with potentially minimal tax penalties. While withdrawing funds from an IRA/401K is certainly not an ideal option, I'm hardpressed for others at this point. I'm just interested in knowing in greater detail any potential pitfalls and penalties. Thanks in advance for any advice you can offer.
JA: Is there anything else important you think the Accountant should know?
Customer: Other than the information I've just provided, the funds from my previous employer's 401K were rolled over into an IRA two months ago. Not certain if this has an impact on options. Thank you!
Submitted: 2 months ago.
Category: Tax
Expert:  Mark Taylor replied 2 months ago.

Hi my name is Mark. I will be happy to help you with your questions. Please give me a few moments to prepare your response.

Expert:  Mark Taylor replied 2 months ago.

You can take distributions from a IRA any time you want. Of course these distribution would be subject to taxation and if you are under 59 1/2 would be subject to a 10% early withdrawal penalty. It is possible to receive an early distributions from your traditional IRA without incurring the 10 percent tax. To do this the distributions need to be a part of a series of substantially equal payments over your life expectancy or the joint life expectancies of you and a beneficiary.

Expert:  Mark Taylor replied 2 months ago.

I hope you found this information to be beneficial. If this answered your question please take a few moments to rate my response. A rating is needed in order for me to receive credit for helping you today. The rating bar is located at the top of the page – ranging from 1 to 5 stars. If you need me to clarify aspect of my response or if there are additional areas of the question that you would like me to consider please let me know. I would be happy to continue the discussion. It has been my pleasure helping you today.