New parents can now take penalty-free early retirement savings withdrawals
Some people may not have enough time before retirement to make up for that loss. Consequently, early distribution strategies should only be used as a last resort, Slott said.
Then, because they didn't have the money to pay the tax bill, they withdrew more money from their retirement savings to cover it. Some exceptions are only relevant to IRAs. including paying for higher education, buying a first home or purchasing health insurance if you are unemployed. For example, people who retire from a fire department at age 52 will have to pay a penalty if they take a withdrawal from their IRA instead of a qualifying retirement plan, Slott said.Another thing a lot of people tend to get wrong is thinking that they do not have to pay a 10% penalty because they run into financial difficulty, such as losing a job.
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