With the US economy trying to get a boost recently, those nearing retirement are worried about how their investments will perform. Well the IRS has stepped in and has given a bit more flexibility on penalties for early withdrawals (before age 59 ½). In a private ruling, the IRS stated a divorce related transfer will not incur a 10% penalty. Distributions from an IRA before age 59 ½ will not incur a penalty if the owner takes substantially equal annual payments over at least 5 years.
Watch Out though…if a payout change is made due to financial need and the payments change, all prior withdrawals will be hit with a penalty. Speak to your tax advisor for the details regarding IRA’s and their tax advantages.
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