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 Any amount withdrawn and not rolled over, regardless of age, is also be subject to ordinary income tax for the year in which the distribution is made.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:
“On the Coast of Coromandel
Where the early pumpkins blow,
In the middle of the woods
Lived the Yonghy-Bonghy-Bo.
Two old chairs, and half a candle,—
One old jug without a handle,—
These were all his worldly goods:
In the middle of the woods,”
—Edward Lear (1812–1888)
“A bizarre sensation pervades a relationship of pretense. No truth seems true. A simple morning’s greeting and response appear loaded with innuendo and fraught with implications.... Each nicety becomes more sterile and each withdrawal more permanent.”
—Maya Angelou (b. 1928)
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—Hesiod (c. 8th century B.C.)