How to tap your retirement savings without getting hit wit h a stiff tax penalty — but only if you absolutely have to

How to tap your retirement savings without getting hit with a stiff tax penalty — but only if you absolutely have to
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WED, SEP 12, 2018
YOUR WEALTH
Straight Talk from the Money Editor
It’s never a good idea to withdraw money early from a qualified retirement plan. Those early withdrawals are taxed as ordinary income and may be subject to a 10% Federal tax penalty. Plus, rebuilding retirement savings is difficult since there are limits to how much a person may contribute to a 401(k) plan annually.

If you find you absolutely need to tap that retirement account, it’s important to know that the IRS does offer several exceptions on early withdrawals, waiving the 10% penalty. I would advise you to visit the IRS website to understand exactly what you can and cannot do. Adhere to those strict IRS rules on taking the payments or else you may face penalties and interest payments.

By the way, you cannot use that early withdrawal to take a cruise or to buy a red sports car, just saying.

For more cool stuff like this, please follow me on Twitter @jimpavia.

For more, check out CNBC’s Financial Advisor Hub.

Jim Pavia

@JIMPAVIA

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@sharon_epperson
5b44bc0e4b20b.jpg Josh Brown
@ReformedBroker
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