Questions to ask before taking an Early withdraw from an IRA
Are you thinking about withdrawing money early from your IRA? If so, you probably have a good reason for this. Even though most experts advise against this, it is something that many people are doing during tough economic times. But before you join this group, make sure you know what you are doing from a tax standpoint. Remember, early withdraw of your funds can result in penalty as well as increased taxes.
Before you take money out of your IRA you should ask yourself the following questions:
1. What is the money for, and is this my only option?
2. How will this effect my retirement?
3. At what age did you fund your IRA? Are you still doing so?
4. How much money are you going to withdraw?
5. What tax bracket are you in, and how will an IRA withdraw change this?
There is no denying that saving for retirement is the last thing on the minds of many Americans. After all, if you have to decide between saving for retirement and paying your mortgage you will probably opt to keep your home.
Are you strongly considering an early withdraw from an IRA? In this case you need to make sure that you are aware of every implication. To avoid any surprises consult with a tax professional before you decide to make any move. This way you will know what you are getting yourself into from a penalty and tax point of view.
