Unforeseen events are just that...unexpected. You started out your career on the right path and began the process of saving for your retirement. Then life throws you a curveball and you realize you will need to access those funds much sooner than you expected. If you have not reached the age of 59½, you will be subject to taxation on withdrawal of those funds and get hit with a 10 percent early distribution penalty. However, there are several exceptions to the penalty. Navigating the exception rules can be tricky because some of them apply only to IRAs, others may only apply to qualified company plans and some apply to both.
When an individual is under the age of 59½ care should be taken to make sure the best decision is made when considering a distribution from a retirement account. Improper planning can lead to additional penalties and taxes that could have been eliminated or at least minimized. To discuss further, contact your professional at UHY LLP in one of our many locations.