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.
September 5 — Everyone
Federal Holiday (Labor Day) Details
September 10 — Employees who work for tips
If you received $20 or more in tips during August, report them to your employer Details
September 15 — Individuals
Make a payment of your 2018 estimated tax if you are not paying your income tax for the year through withholding (or will not pay in enough tax that way). Use Form 1040-ES. This is the third installment Details
September 15 — S Corporations
File a 2017 calendar year income tax return (Form 1120S) and pay any tax due. This due date applies only if you timely requested an automatic 6-month extension Details
September 15 — Partnerships
File a 2017 calendar year return (Form 1065). This due date applies only if you were given an additional 5-month extension Details
September 15 — Corporations
Deposit the third installment of estimated income tax for 2017 Details
September 15 — Social security, Medicare, and withheld income tax
If the monthly deposit rule applies, deposit the tax for payments in August.