Two Ways To Reduce Your 2020 Taxes That You Know About…And One That You ve Never Considered forbes.com - get the latest breaking news, showbiz & celebrity photos, sport news & rumours, viral videos and top stories from forbes.com Daily Mail and Mail on Sunday newspapers.
If you withdraw money from your traditional Individual Retirement Account (IRA) before age 59½, you ll likely face a penalty. After all, IRAs were designed as a tax-advantaged way to encourage individuals to save for retirement. One way to persuade people to keep the funds intact is by making it painful to withdraw them before they reach retirement or at least, retirement age.
Following that reasoning, the IRS imposes a 10% penalty (plus income tax in most cases) on early withdrawals, as it dubs funds taken out by those under 59½.
However, there are exceptions. The IRS names certain hardship provisions that allow you to take your money out of your IRA early without paying the 10% penalty. You must meet specific circumstances to make these hardship withdrawals.
The best IRA accounts of April 2021
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