Hello there,I'm deeply interested to learn following:I' ve got an IRA account. Say, I have $4000 principal, and $ 300 in earnings. If I withdraw the whole $4300 before being 59.5 years old, am I going to be charged 10% penalty at the firm where my account is, andthen I will be liable for taxes on my tax return?Or the firm will not deduct anything, and I will need to pay my taxes on my tax return?Pavel
Yes, when you take a distribution from your IRA, the custodian will notify the IRS and you will be required to pay the 10% penalty on the whole amount distributed in addition to income taxes on the amount that was earnings and contributions that were tax deductible. Withholding situations will vary, but yes, they may withhold part of the distribution.Whether they take withholding or not, the whole thing will get resolved when you file next years taxes. If they don't take withholding, you could be required to file estimated taxes, usually at the end of the quarter when you take the distribution, or be subject to additional penalties for failure to do so at tax time.
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