There is a 10% penalty on early withdrawals from Traditional IRA\'s, with some e
ID: 2616765 • Letter: T
Question
There is a 10% penalty on early withdrawals from Traditional IRA's, with some exceptions.
Look at the IRS Pub 590-B at https://www.irs.gov/pub/irs-pdf/p590b.pdf to find the exceptions to that rule.
Check all items below for which early distributions can be made without incurring a penalty.
qualified higher education expenses
distributions in the form of an annuity
total disability
medical insurance while unemployed
to buy a first home
Mandy is your client. She is single and she is interested in saving for retirement. She is 29 years old. She anticipates making about $100,000-ish for the foreseeable future. She is a saver/investor, so most likely she is going to be very wealthy when she retires.
What would be the best advice for her re Traditional and Roth IRAs?
a. Save in a Roth IRA. You have a lot of years left for tax-free earnings to build up. You will not be required to make withdrawals in retirement. You will only need to withdraw what you desire to in your retirement years.
b. Save in a Traditional IRA. You have a lot of years left for tax-free earnings to build up. You will not be required to make withdrawals in retirement. You will only need to withdraw what you desire to in your retirement years.
c. Save in a Traditionall IRA. The tax-deferred savings are preferred to tax-free.
d. Save in a Roth. The required minimum distributions start at a later age than for a Traditional IRA.
a.qualified higher education expenses
b.distributions in the form of an annuity
c.total disability
d.medical insurance while unemployed
e.to buy a first home
Explanation / Answer
1) optoop.C) total disability
2)oprion .b)Save in a Traditional IRA. You have a lot of years left for tax-free earnings to build up. You will not be required to make withdrawals in retirement. You will only need to withdraw what you desire to in your retirement years.
Thanks
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