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This IRA escapes the 10% Tax Penalty - Learn! Earn! Prosper! - YouTube
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hi i'm paresha a certified financial
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planner in hicksville long island new
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york
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i get a lot of questions about ira
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withdrawals
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in today's video i will share some
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important points
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about ira withdrawals
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that escape the 10 penalty
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the reason withdrawals from a
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traditional i r a
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in individual retirement account
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before 59 and a half
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are generally subject to a 10 tax
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penalty is because policymakers wanted
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to create a disincentive to use these
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savings for anything other than
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retirement yet policy makers also
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recognize that life can present more
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pressing circumstance
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than that require access to these
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savings
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in appreciation of this a list of
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withdrawals that may not be incurring a
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10 early withdrawal penalty has grown
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over the years
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let me share the penalty-free withdrawal
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circumstances
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under which individuals may withdraw
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from an ira before age 59 and a half
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without a tax penalty
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ordinary income tax however
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generally is due on such distribution
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first then if you die before 59 and a
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half the beneficiary or beneficiaries of
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your ira may withdraw the assets without
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penalty however if your beneficiary
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decides to roll it into their ira they
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will forfeit this exemption disability
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disability is defined as being unable to
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engage in any gainful employment because
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of a physical or a mental disability as
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determined by a physician
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third substantially equal periodic
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payments you are permitted to take a
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series of substantially equal periodic
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payments and avoid the tax penalty
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provided they continue until you turn 59
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and a half or for five years whichever
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is later the calculation of such charges
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is complicated an individual should
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consider speaking with a qualified tax
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professional
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home purchase you may take up to ten
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thousand dollars toward the purchase of
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your first home according to the irs you
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may also qualify if you have not owned a
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home in the last two years
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this withdrawal limit is a lifetime
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limit
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fifth unreimbursed medical expenses
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this exception
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covers medical expenses over 7.5 percent
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of your adjusted gross income sixth
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medical insurance this permits the
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unemployed to pay for medical insurance
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if they meet specific criteria
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seven higher education expenses
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you can use the fund towards higher
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education expenses for your spouse
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children grandchildren or yourself only
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certain institution and associated costs
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are permitted
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irs levy
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funds may be used to pay
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an irs levy
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9. active duty call-up
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reservists may use funds called up after
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9 11
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and those withdrawals meet the
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definition of qualified reservist
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distribution
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10th birth or adoption of a child this
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new exception was recently added to the
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list the distribution must be taken
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within one year of birth or adoption of
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the child the total amount eligible for
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penalty free exception
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is 5 000
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although you may still pay regular
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income tax on the distribution
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these are the circumstances in which ira
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withdrawals can be made without the 10
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tax penalty if you have any questions
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about this topic comment below
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see you again with another exciting
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financial topic for more finance related
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topics like share and subscribe to our
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channel thank you very much
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