So you get this IRA, put money in it every year—maybe even every month—you get statements from it and you know it’s there.
But do you even know how to take it out?
Do you sometimes think of just taking the money and running before you’re 59 ½? After all, what’s so special about 59 ½?
Perhaps some of the beauty of IRAs is that people really don’t know how to access them easily. If you could transfer money out of an IRA with your debit card, that may be way too tempting and POOF!…no money left for retirement.
Thankfully it’s not that easy—so you actually have an IRA for your retirement. And withdrawing it before age 59 ½ brings with it a 10% federal penalty—so if your IRA is $100,000, you’re taking a $10,000 hit to get to it early—not to mention federal and state income taxes that must also be paid.
However, if you really need cash before age 59 ½, there is a way around it. You may set up equal distributions, based on your life expectancy and the amount of your IRA, but you are locked into that distribution schedule for at least 5 years, otherwise, you will be penalized on the entire distribution amount.
If you’re 59 ½, you may take a lump-sum distribution or periodic distributions. And you may roll your IRA into another financial institution anytime, as long as the transfer is done in 60 days.
Basically, the idea is, before taking a distribution from your IRA or making a change with your IRA, it is always prudent to check in with a financial advisor. There are so many tax implications and special circumstances that every situation is different. Know the facts so you can make an informed decision.
Carl Strozyk, CFP® is President of 360 Financial Group, providing services for small businesses as well as individuals and families. For more information or assistance with your IRA, contact us at 410.893.2100 or by email at info@360FinGroup.com.
About 360 Financial Group
360 Financial Group, founded in 1990, provides a holistic approach to comprehensive wealth management as well as tax and accounting and investment management services. At 360 Financial Group, our MISSION is to be our clients’ primary advisor. We believe our knowledge, experience, and intuitive approach to tax and financial planning gives our clients the confidence they need to help them realize their dreams.
Registered Representative, Securities Offered Through Cambridge Investment Research. Inc., a Registered Broker-Dealer, Member FINRA, SIPC and Investment Advisor Representative, Cambridge Investment Research Advisors, Inc., a Registered Investment Advisor. Small Business Group, Inc. and Cambridge are not affiliated.
Cambridge Investment Group, Inc. is a privately-controlled firm with a national reach across the financial services industry consisting of multiple broker-dealers and RIAs, including Cambridge Investment Research Advisors, Inc. – a large corporate RIA; and Continuity Partners Group, LLC – a special purpose broker-dealer and registered investment advisor; and Cambridge Investment Research, Inc. – an independent broker-dealer, member FINRA/SIPC, that is among the largest privately-controlled independent broker-dealers in the country supporting approximately 3,000 independent financial professionals nationwide who serve their clients as registered representatives and investment advisor representatives, choosing to use either Cambridge’s firm Registered Investment Adviser or their own. For more information visit www.joincambridge.com.
Broadridge Investor Communication Solutions, Inc. does not provide investment, tax, or legal advice. The information presented here is not specific to any individual’s personal circumstances.
To the extent that this material concerns tax matters, it is not intended or written to be used, and cannot be used, by a taxpayer for the purpose of avoiding penalties that may be imposed by law. Each taxpayer should seek independent advice from a tax professional based on his or her individual circumstances.
These materials are provided for general information and educational purposes based upon publicly available information from sources believed to be reliable—we cannot assure the accuracy or completeness of these materials. The information in these materials may change at any time and without notice.
Prepared by Broadridge Investor Communication Solutions, Inc. Copyright 2016.