Early withdrawal from retirement appears to have been penalized at 35% (on top of regular income taxes), rather than 25%?
I had to withdraw from my Simple IRA retirement fund last year for emergency reasons. When I withdrew, the IRA company withheld 10% for federal taxes. When I did my taxes at the end of the year though, I was charged 25% in taxes. The form I received for the withdraw said that the taxable portion is XXX (where XXX is the total amount withdraw), not YYY (where YYY is the amount withdrawn after 10% withheld), and the form also said (box 4) the amount that was withheld and "taxable amount not determined"
So, my total penalty charged for the early withdrawal was 35% (along with it being counted as income and such, of course). Is there any case where this could happen, or was my taxes done wrongly?
(1)1 Comments
Sorted by latest first Latest Oldest Best
From SIMPLE IRA Plan FAQs - Distributions -
"....a distribution within this 2-year period, then the rate of additional tax under this special rule is increased from 10 percent to 25 percent."
This means you have tax on the full amount, plus a penalty of 25% if the account is less than 2 years old.
Terms of Use Privacy policy Contact About Cancellation policy © freshhoot.com2026 All Rights reserved.