Traditional individual retirement accounts, IRAs, are a good way to save for retirement. When times get tough, however, and you need some extra cash, it can be tempting to withdraw some of this money before the minimum age of 59 1/2. This is almost always a bad idea, unless you are up against a wall and have exhausted every other option.
If you withdraw money from your IRA before age 59 1/2, you will generally have to pay a 10 % early withdrawal penalty in addition to income tax on the amount withdrawn. And if it’s a company sponsored Simple IRA within the first 2 years the plan has been opened that penalty goes up to 25%!
Once you turn age 59 1/2, you can withdraw any amount from your IRA without having to pay the 10 percent penalty. But regular income tax will still be due on each withdrawal. IRA distributions are not required until after age 70 1/2.
