Useful Links: IRS.gov Help For Hurricane Victims
News Essentials What's Hot News Releases IRS - The Basics IRS Guidance Media Contacts Facts & Figures Around The Nation e-News Subscriptions
The Newsroom Topics Multimedia Center Noticias en Español Radio PSAs Tax Scams/Consumer Alerts The Tax Gap Fact Sheets IRS Tax Tips Armed Forces Latest News
IRS Resources Compliance & Enforcement News Contact Your Local IRS Office Filing Your Taxes Forms & Instructions Frequently Asked Questions Taxpayer Advocate Service Where to File IRS Social Media
| Issue Number: Tax Tip 2018-40
Things to Remember when Considering Early Withdrawals from Retirement Plans Many taxpayers may need to take out money early from their Individual Retirement Account or retirement plan. Doing so, however, can trigger an additional tax on early withdrawals. They would owe this tax on top of other income tax they may have to pay. Here are a few key points to know: - Early withdrawals. An early withdrawal is taking a distribution from an IRA or retirement plan before reaching age 59½.
- Additional tax. Taxpayers who took early withdrawals from an IRA or retirement plan must report them when they file their tax return. They may owe income tax on the amount plus an additional 10 percent tax if it was an early withdrawal.
- Nontaxable withdrawals. The additional 10 percent tax doesn't apply to nontaxable withdrawals, such as contributions that taxpayers paid tax on before they put them into the plan.
- Rollover. A rollover happens when someone takes cash or other assets from one plan and puts it in another plan. They normally have 60 days to complete a rollover to make it tax-free.
- Exceptions. There are many exceptions to the additional 10-percent tax. Some of the rules for retirement plans are different from the rules for IRAs.
- Disaster Relief. Participants in certain disaster areas may have relief from the 10-percent early withdrawal tax on early withdrawals from their retirement accounts.
- File Form 5329. Taxpayers who took early withdrawals last year may have to file Form 5329, Additional Taxes on Qualified Plans (including IRAs) and Other Tax-Favored Accounts, with their federal tax returns.
Use IRS e-file. Early withdrawal rules can be complex. IRS e-file can help. It's the easiest and most accurate way to file a tax return. The tax preparation software that taxpayers use to e-file will pick the right tax forms, do the math and help get the tax benefits they're due. Seven out of 10 taxpayers qualify to use IRS Free File tax software. Free File is only available through the IRS website. Additional resources: Interactive Tax Assistants: IRA FAQs – Distributions/Withdrawals
Publication 590-B, Distributions from Individual Retirement Arrangements
Publication 575, Pension and Annuity Income
Filing your taxes
IRS Tax Map Share this tip on social media -- #IRSTaxTip: Things to Remember when Considering Early Withdrawals from Retirement Plans. https://go.usa.gov/xnhyC Back to Top
Thank you for subscribing to IRS Tax Tips, an IRS e-mail service. For more information on federal taxes please visit IRS.gov. This message was distributed automatically from the IRS Tax Tips mailing list. Please Do Not Reply To This Message. |
No comments:
Post a Comment