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IRA & 401(k) Early Withdrawals

How to Slash Your Tax and Avoid Penalties

By Nick Braun EA PhD

This unique guide contains the clearest explanation you will find anywhere of the IRA and 401(k) early withdrawal rules.

It is essential reading if you want to tap your retirement plan before age 59½ and slash your taxes.

IRA and 401(k) early withdrawals are made for lots of reasons: to start a business, retire early, repay loans or to cover major expenses such as college tuition fees and medical bills.

However, it is essential to have a good understanding of the early withdrawal rules if you want to avoid the 10% additional tax. In some cases it is also possible to tap your retirement plan without paying any taxes at all!

Traditional IRAs, Roth IRAs and 401(k) plans have different early withdrawal rules. This guide explains them ALL and contains lots of tax planning tips and examples throughout.

 

 

What Subjects are Covered in the Guide?

Subjects covered include:

• How to withdraw money from your IRA or 401(k) and escape both income tax and the 10% early distribution tax
• When you will save more tax by tapping your IRA
• … and when it pays to tap your 401(k) plan instead

• How to take a 60 day tax-free loan from your IRA
• Everything you need to know about tax-free 401(k) loans:
  
    The 10 pros and cons of 401(k) loans
  
    How to calculate the maximum you can borrow
  
    How to avoid your loan being taxed as an early distribution
  
  
• How to use a “check book IRA” to fund a business… without paying a dime in taxes

The guide also tells you everything you need to know about Substantially Equal Periodic Payments (SEPPs), also known as 72(t) distributions.

These are regular IRA or 401(k) distributions that always escape the 10% additional tax. It does not matter how old you are or how you spend the money.

Subjects covered in the SEPP chapter include:

• Plain-English guide to calculating your maximum IRA or 401(k) withdrawal using the three IRS approved methods: the required minimum distribution method, the amortization method and the annuitization method
• Which method is best for YOU
• All the different things you can and cannot do when you take regular withdrawals
• Who should and who definitely should not use this tax loophole
• How to increase your tax savings by splitting your IRA or having multiple IRAs

• Why Roth IRAs are the best place to store emergency cash, allowing you to escape income tax and the early withdrawal tax
• How to withdraw money tax free if you convert from a traditional IRA to a Roth IRA
• How to withdraw money from your Roth IRA to buy a home without any income tax or 10% penalty
• Detailed examples showing how much tax is payable on Roth IRA withdrawals

• A detailed look at ALL the other exceptions to the 10% early distribution tax, including:
  
    How to tap your IRA or 401(k) plan for $1,000s of dollars every year to pay college
  tuition expenses for you, your children or grandchildren
  
    How couples can withdraw $20,000 to buy a home for themselves or their children
  
    How to use your IRA or 401(k) money to pay medical expenses
  
    … plus the important trap to watch out for
  
    How to withdraw money to pay medical insurance premiums
  
    The disability exception and how it can be used by people who are still working
  
  
• How to complete your tax return and the extra forms required

What Will I Receive?