Not exact matches
The advantage of an inherited IRA is that you won't pay the 10 percent
early withdrawal
penalty even if you're under age 59 1/2 (but you will pay taxes on the
distributions).
The grandchildren can then avoid the 10 %
early distribution penalty and withdraw earnings tax - free
even if they are under age 59-1/2.
There's one situation where it may make sense to convert
even though you'll pay the
early distribution penalty on amounts used to pay the tax.
Early withdrawals from your retirement plan might not be the best option for your situation,
even if you qualify for a
penalty - free
distribution.
In extreme situations like LaRusch's, after carefully thinking it through and running the numbers with a 401k withdrawal calculator, you might find it's still in your best interest to make a 401k withdrawal or other type of
early distribution —
even if there are
penalties.
The first is that
even if you don't want to mess with things like Roth Conversion Ladders or SEPP
distributions, it still makes sense to max out your pre-tax retirement accounts and then just pay the
early - withdrawal
penalty!
If you are under age 59 1/2 and
distribution of the earnings will be subject to a 10 %
early -
distribution penalty, this approach can be
even more attractive.
Even if your retirement plan permits hardship withdrawals,
distributions received before age 59 1/2 are still subject to the 10 %
early distribution penalty.