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    teamvettered's Avatar
    teamvettered Posts: 2, Reputation: 1
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    #1

    Jan 26, 2008, 10:18 AM
    IRA early withdrawal penalty paid?
    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
    AtlantaTaxExpert's Avatar
    AtlantaTaxExpert Posts: 21,836, Reputation: 846
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    #2

    Jan 27, 2008, 09:05 PM
    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?
    teamvettered's Avatar
    teamvettered Posts: 2, Reputation: 1
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    #3

    Jan 28, 2008, 04:29 PM
    Quote Originally Posted by teamvettered
    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.
    AtlantaTaxExpert's Avatar
    AtlantaTaxExpert Posts: 21,836, Reputation: 846
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    #4

    Jan 30, 2008, 08:34 AM
    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.
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