Exceptions to the 10% Early Distribution Penalty

If you take a distribution from a retirement account before you reach the age of 59 1/2, generally, you will have to pay a 10% early distribution penalty. However, if you take an early distribution to pay for unreimbursed medical expenses or qualified higher education expenses, you may be able to avoid the early withdrawal penalty. For other common exceptions in which you may not be subject to the 10% penalty, read this C.P.A. Insight.

SEP-IRA vs. Safe Harbor 401(k) Plan

Both SEP-IRAs and Safe Harbor 401(k) plans allow small-business owners to provide a qualified retirement saving option to their employees while saving a significant amount for their own retirement. These plans have different funding rules, and should be looked at closely by a business owner. For more information on the differences between SEP-IRAs and Safe Harbor 401(k)s, read this Financial Strategy.

The First Mandatory IRA Withdrawal

When discussing the initial mandatory IRA withdrawal, one can easily become confused by the rules and regulations on when the withdrawal should occur. Assets such as qualified retirement plans, 403(b) Plans, IRAs, SEPs, SIMPLE IRAs and section 457 Plans are all included in calculating a mandatory withdrawal. For more information about your first mandatory IRA withdrawal and to learn how your withdrawal is calculated, read this Financial Strategy.