I am considering early withdraw of one of my trad. IRA's. I have the option of having the 10% penalty with-held or not, from the withdrawal. When is this federal 10% penalty due (at point of withdrawal or April '09) ? Thank You

The 10% Early Withdrawal Penalty applies in the year you do the withdrawal.

However, you ALSO PAY TAXES on this money.

WHY are you withdrawing it?

I am considering early withdraw of one of my trad. IRA's. I have the option of having the 10% penalty with-held or not, from the withdrawal. When is this federal 10% penalty due (at point of withdrawal or April '09) ? Thank You
To pay off some c.c. debt in order to improve credit score in order to purchase a home. Have been renting since moving to Florida 2-years ago. Housing market is still falling and don't plan on buying until "09 but want to clear up income to debt ratio. If penalty (& obviously taxes) are not due til "09 the Full amount of ira will be put to better use on a 20% c.c. for a year than if I have them with hold for me and without the c.c. pymt each month I will be able to accumulate the $ for tax time by next year.

Find another way to pay down the credit card debt.

You CAN withdraw $10,000 for the purchase of a home and avoid the 10% Early Withdramal Penalty, but if you withdraw money to pay off credit cards, expect to pay AT LEAST 25% of the money on taxes.