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5610 Ward Road, Suite 300 Arvada, CO 80002
9200 E. Mineral Avenue Centennial, CO 80112
Phone: 303-252-0852
Website: www.walshfinancialsolutions.com
September/October 2017
The No Penalty Zone
One of the best things about saving for retirement in an employer’s qualified retirement plan or an individual retirement account (IRA) is that you generally won’t be able to access the funds without penalty until you’re near retirement age. That means your account balance has the potential to grow for many years before you start making withdrawals.
To discourage you from dipping into your tax-deferred savings before retirement, the IRS generally imposes a 10% penalty on withdrawals made before age 59½. But what if you need a substantial amount of cash before then? Under certain circumstances, early withdrawals may qualify for an exception to the penalty.
Qualified Plansand IRAs
Early withdrawals from both IRAs and qualified plans, such as 401(k) plans, may be allowed without penalty for the following reasons:
- An account owner’s death or disability
- To pay unreimbursed medical expenses, which generally must exceed 10% of your adjusted gross income
- Substantially equal periodic payments (SEPPs) made over your lifetime or the lifetimes of you and abeneficiary
Only for IRAs
IRA owners may also be able to take penalty-free early withdrawals to pay:
Only for Qualified Plans
Early withdrawals from a qualified plan are not subject to penalty when the distribution is made:
- After your separation from service with your employer, provided your separation from service occurs during or after the calendar year in which you attain age 55
- To a former spouse under a qualified domestic relations order
Certain other penalty exceptions apply. The rules are complex, so consult your tax advisor before taking an early withdrawal.
FR2017-0504-0006/E
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Advisory Services offered through Walsh Financial Solutions or Vanderbilt Advisory Services. Securities offered through Vanderbilt Securities, LLC. Member FINRA, SIPC. Registered with MSRB. Walsh Financial Solutions and Vanderbilt Securities, LLC are separate and unaffiliated entities. Clearing agent: Fidelity Clearing & Custody Solutions. Insurance Services offered through Vanderbilt Insurance and other agencies. Supervising Office: 125 Froehlich Farm Blvd, Woodbury, NY 11797 631-845-5100
For additional information on services, disclosures, fees, and conflicts of interest, please visit www.vanderbiltfg.com/disclosures
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