Before you turn 59 1/2, you will be charged a 10% tax on the taxable portion of any money you withdraw from an IRA or qualified employer retirement plan, UNLESS you are withdrawing the money to pay for an expense that qualifies for the exception. They are:
the employee left work after reaching 55
the distribution is part of a series of payments made over the recipient's expected lifetime
the distribution is made due to total & permanent disability
your medical expenses for the year exceeded or will exceed 7.5% of your adjusted gross income (but only enough to cover the expenses over 7.5%)
the divorce decree stipulates that the distributions will be made
Check out Form 5329 and its instructions for the specifics. There are also some exceptions that apply only to IRA distributions (education, buying a home, unemployment), so you might be able to take the money from an IRA instead.
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This is not legal advice and you are not my client. Double check everything with your own attorney and your state's laws.
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