When you need money for an emergency, education, paying off debt, or any other purpose, it's tempting to look at your retirement accounts and consider taking a withdrawal before you reach retirement age.
The tax consequences of doing so can be costly, however. Before you take early withdrawals from your Individual Retirement Arrangement (traditional IRA or Roth IRA), 401(k) plan, or other retirement account, read these tips:
The IRS charges a 10% penalty on withdrawals from qualified retirement plans before you reach age 59 ½, with certain exceptions. After you pay the penalty and the regular income tax, you may not have as much left as you had hoped.
A distribution of eligible retirement plan assets that you reinvest within 60 days is considered a rollover. You can only make one tax-free rollover from a distributing account within the one-year period beginning when you receive the distribution. A trustee-to-trustee transfer from one trustee directly to another is not a rollover and is not affected by the one year waiting period requirement.
Withdrawals from a Roth IRA are considered to come first from contributions and then from earnings. You do not pay income tax or penalty until your total withdrawals exceed your total contributions. (Certain exceptions may apply if you rolled over amounts from a traditional retirement plan to your Roth IRA.)
If the payer knows you qualify for an exception to the early distribution penalty, you should see a numeric code for the exception in Box 7 of Form 1099-R.
March 1 — Farmers & fishermen
File your 2017 income tax return (Form 1040) and pay any tax due Details
March 10 — Employees who work for tips
If you received $20 or more in tips during February, report them to your employer Details
March 15 — S Corporations
File a 2017 calendar year income tax return (Form 1120S) and pay any tax due Details
March 15 — S Corporation election
File Form 2553, Election by a Small Business Corporation, to elect to be treated as an S corporation beginning with calendar year 2017. If Form 2553 is filed late, S corporation treatment will begin with calendar year 2018.
March 15 — Partnerships
File a 2017 calendar year return (Form 1065) Details
March 15 — Electing larger partnerships
Provide each partner with a copy of Schedule K1 (Form 1065B), Partner's Share of Income (Loss) From an Electing Large Partnership, or a substitute Schedule K1. This due date applies even if the partnership requests an extension of time to file the Form 1065B by filing Form 7004
March 15 — Partnerships
Electing large partnerships: File a 2017 calendar year return (Form 1065-B) Details
March 15 — Social security, Medicare, and withheld income tax
If the monthly deposit rule Page 6 Publication 509 applies, deposit the tax for payments in February.
March 31 — Electronic filing of Forms W2
File copies of all the Forms W2 you issued for 2017. This due date applies only if you electronically file.
March 31 — Electronic filing of Forms W2G
File copies of all the Forms W2G you issued for 2017. This due date applies only if you electronically file.
March 31 — Electronic filing of Forms 8027
File Forms 8027 for 2017. This due date applies only if you electronically file.