In the previous 3 weeks, we have discussed several strategies for withdrawing from retirement accounts without incurring the 10% penalty. In these cases, it didn’t matter as much what you were using the funds for. However, the IRS also has several exceptions that allow for Traditional IRA withdrawals if you use the funds for specific expenses. While you will still be subject to taxes, you can avoid the 10% penalty if followed correctly.
-Specific college costs for qualified family members
-Health Insurance costs if you are on unemployment for 12 weeks
-Medical Expenses that are not reimbursed and are over 10% of your adjusted gross income
-First home purchase ($10,000 per person)
-Active military duty over 179 days
There are several rules that apply to these exceptions so be sure to work with a qualified tax advisor before implementing.
Disclaimer: Alex Voorhees and Reston Wealth Management do not provide legal, accounting or tax advice. This information is not intended to be a substitute for specific individualized tax or legal advice. We suggest that you discuss your specific situation with a qualified investment, tax or legal advisor. The opinions voiced in this article are for general information only and are not intended to provide specific advice or recommendations for any individual. To determine which investment(s) or strategies may be appropriate for you, consult your financial advisor prior to investing. No strategy assures success or protects against loss. You should consider the investment objectives, risks, charges and expenses of any investment carefully before investing.