Can anyone tell me the penalty for early withdrawal from a simple IRA?

Question

Any information will help, I need to know how it will effect me when I file my taxes and what all the penaltys are.

Answer 1

Don't do it if you can avoid it.

You must pay the taxes as if it was taxable when you made the contribution, PLUS a 10% penalty on top of that. E.g. if that money would have been in the 28% bracket, you will be paying 38% on your money.

There are a few reasons you can take money out (hardship, etc.) that avoid the penalty, but you must still pay the taxes.

Answer 2

I had to withdrawal a couple of times from an IRA due to not having a study or permanent job for three years. Your tax-preparer should be able to tell you what penalty's you might have to pay. I claimed hard ship which the 10% was waived but I still had to count it as income. Some IRA will give you so many days to pay the money back without penalty. Good luck!

Answer 3

It is a 10%. I did it because my credit card are at 12%. I am trying to get out of debt; therefore it was worth it (Every penny of it) for a peace of mind.
Another thing you need to remember is that every 10 to 15 years the stock market crashes, which is when your simple IRA somehow loses massive amount of money. Then they keep telling you to put more money in, in order to grow. What they really mean is put the money in so that you would not be able to calculate your actual loss. How do you think I learn that?

Answer 4

Sure...a 10 percent tax penalty on top of the normal taxes due. Do you really need to use this money? Better to get it from any other source.

Answer 5

I believe there is an additional 10% tax

Answer 6

10% unless you have a valid reason to draw it then the penalty can be waived