In the Video above, Scott Farnsworth, Central Florida's Tax-Free Retirement Expert answers a frequently asked question: Is there a penalty for withdrawing my money early from an IRA or 401(k)?
"Yes, there's a 10% penalty for taking the money out before you're 59 and a half, as well as the tax at your highest marginal rate. If you take money out of a Roth IRA before 59 and a half there is a penalty but no tax. By comparison, if you use a TRA or a Tax-Free Retirement Account, you can take money out early and not pay a tax or a penalty. Some people use a TRA to fund their children's college education or to cover medical emergencies or things like that because there's no reporting and no penalty and no tax. It's a great tool if you want flexibility, if you're ready to retire early, or you have some of these other situations I mentioned."
Is there a penalty for withdrawing my money early from an IRA or 401(k)?