If making an early withdrawal from an IRA account, do you pay regular tax and a 10% penalty?
Answer:
Yes, if it is as regular IRA. If it is a Roth IRA, you would just pay the penalty.
Yes, sad but true.
depends on what type of IRA you have.
Both Roth and regular IRAs have a tax plus 10% penalty. However, there are exceptions for certain things, such as certain medical expenses.
More info:
http://www.taxprophet.com/faq/990523.htm.
If it is a regular IRA you would pay taxes and penalties if you withdraw principal or gains before you are59 1/2. if it is a Roth there are no taxes and you can withdraw any principal you put in without penalty as long as if has been in 5 years or longer. You will be penalized if you withdraw gains before 59 1/2 or if you withdraw principal that has been in less than 5 years.
tonalc1 is closest to right. But in addition to medical expenses there ARE other expenses that allow you to avoid the penalty: such as education expenses for you, your spouse or your dependants. Also, and I'm not sure of this, but I think a legal judgement against you in most cases allows avoidance of the penalty as well.
You still owe ordinary income tax on these distributions, however, unless its a Roth, in which case you owe only capital gains taxes on the appreciation of the investments (so long as you held them 1 year or longer).
not if it is a roth ira.
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