I'm 58, and I need to withdraw from my IRAs to make my house payments. Would I be penalized for doing so?
by 
Londonbuck
ANSWERS: 4
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YES. There will be a 10% early withdrawal fee for taking a distribution before you reach the age of 59 1/2.
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Just to add to Jennifer's answer, here is the rules (subject to some exceptions that you should review with your CPA or financial advisor): Contributions you make to an IRA are generally not supposed to be available for your use until you reach age 59.5. As a practical matter, though, you are always free to take out the money and use it any time you want. If an early withdrawal is made, a person has to pay regular income tax on the withdrawn amount, plus an additional 10 percent penalty tax on the amount that is included in gross income.
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Do whatever you can to avoid this. You could be paying more then 40% in tax on that money just federally. So you could be paying twice as much as your house payment just because you are taking out that cash.
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IRS code 72(t) allows you to distribute your qualified retirement plan in "substantially equal payments" without penalty, so you can establish an income stream sufficient to pay your payment for a specific time. Most financial advisors and planners can calculate the income stream and will do so at no charge. Rob Drury, Safe Money Concepts, 210-387-8875, rob@safemoneyconcept.com
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