Early Withdrawal Penalty
If a participant under the age of 59.5 wishes to take a distribution and it has been less than two years since their first contribution into the plan, they could be penalized up to 25% (10% if more than two years) by the Internal Revenue Service. This two-year rule applies to all distributions, including rollovers from the SIMPLE IRA. Any amount withdrawn and not rolled over, regardless of age, is also be subject to ordinary income tax for the year in which the distribution is made.
Read more about this topic: SIMPLE IRA
Famous quotes containing the words early, withdrawal and/or penalty:
“We early arrive at the great discovery that there is one mind common to all individual men: that what is individual is less than what is universal ... that error, vice and disease have their seat in the superficial or individual nature.”
—Ralph Waldo Emerson (1803–1882)
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—Maya Angelou (b. 1928)
“It is odd that the NCAA would place a school on probation for driving an athlete to class, or providing a loan, but would have no penalty for a school that violates Title IX, a federal law.”
—Cardiss L. Collins (b. 1931)