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Author: rensor1 One star, 50 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 19553  
Subject: Early W/D From IRA w/Penalty Date: 12/24/1999 2:04 PM
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Can anyone direct me through the practical 1-2-3 steps of withdrawing some funds from my traditional IRA prior to age 59 1/2?

My online IRA portfolio has done so fantastically well and continues to grow at such a rapid pace, that I've decided to retire at age 57 and begin taking a monthly draw from my IRA, and pay the 10% penalty (the portfolio is increasing by multiples of what I would be taking out each month).

Is it just a matter of selling some of the stock and asking my on-line broker to send me a check? What documentation is issued so that IRS knows that I owe a penalty? Also, how long does it usually take to receive a check? I plan to set up a new bank account in which I would set aside enough from each IRA withdrawal to pay the penalty and income tax when due. Also, I'm guessing that I will have to pay quarterly estimated taxes on my withdrawals?

Actually, now that I think about it, there might be a better tactic. That is, withdraw only the amount of cash really needed for monthly expenses and wait before withdrawing the amounts needed for penalty tax and income tax, leaving that money in the portfolio to contine "compounding/working" until the last minute prior to paying Uncle Sam.

By the way, for those of you wondering why I'm not considering the 72(t) option, I have considered it, but am not going that route because I don't want to limit myself to "substantially equal" payments over my remaining living years. This portfolio is going to grow to ever-increasingly higher levels and I want the flexibility of withdrawing varying amounts in the future for various/multiple needs and wants.

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