Early Withdrawal

Archive for March, 2011

David Cameron at Zeitgeist ’07

Alcohol & Substance Abuse : Disability Benefits for Recovering Alcoholics

Question: Is there a penalty for withdrawal on profit sharing if it is for first time purchase of a home?

Suze Orman said there isn’t a penalty if you use your IRA for a first time home purchase. I have a profit sharing account & want to know if this same rule applies?

Answer: Normally you cannot withdraw anything from an employee retirement plan if it is at a current employer. IRS Publication 575 covers distributions from pensions and annuities including 401k, 403b, etc. And it does not mention any penalty exception for buying a home.

Note that if it was from a former employer and able to be transferred to an IRA, up to $10,000 could be withdrawn without penalty towards first home (see IRS Publication 590 for details). However, it does not say there would be no tax. It would be taxed as though the withdrawal was added to your income.

how to be milionaire