How advisors can help clients get early retirement account distributions – without paying a penalty

May 10, 2022 by Jeffrey Levine

The Internal Revenue Code encourages individuals to save for retirement by offering taxpayers the ability to invest for their ‘golden years’ through a variety of tax-favored retirement accounts such as IRAs, Roth IRAs and 401(k) plans. 

But the tax benefits provided by these accounts don’t come without strings attached. Notably, in order to help ensure that the funds accumulated within a retirement account are actually used for retirement, IRC Section 72(t) generally imposes a 10% “early distribution penalty” on the pre-tax portion of any amounts distributed from a retirement account before the owner reaches age 59 ½.

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Originally Posted at Financial Planning on May 4, 2022 by Jeffrey Levine.