- Benjamin F. Edwards – Financial Advisors in St. Louis - https://www.benjaminfedwards.com -

If You Retire Early, Watch Out for IRS Penalities

By Theresa Fry, Senior Vice President and Manager, IRA’s, Retirement & Education Planning

If there is one thing that this past year and a half has taught us, it’s that life doesn’t always go according to plan. If you find yourself in a situation where you are retiring early – whether by choice or by circumstance – and you need to access the money in your retirement accounts earlier than you expected, it’s important to understand what options you have and the tax impacts of accessing retirement accounts early.

IRAs, SEPs and SIMPLEs

401(k) and Other Employer-Sponsored Retirement Plans

Penalty-Free Withdrawals Available from Both IRAs and Employer-Sponsored Retirement Plans

Because retirement savings accounts offer tax advantages that other savings accounts don’t, make sure you have considered other possibilities first before taking a withdrawal from your 401(k) or IRA. Besides those discussed above, there are other exceptions that may also apply. Your financial advisor can help you understand which alternatives are available to you. In addition to income taxes and penalties, the loss of tax-deferred growth is also a consideration you should review with your tax professional before taking an early retirement account withdrawal.

 

Benjamin F. Edwards does not provide tax advice; therefore, it is also important to consult with your tax professional for additional guidance tailored to your specific situation.