Penalty Free Ira Withdrawals!

When the Individual Retirement Account was created in 1974 (by the Employee Retirement Income Security Act, or ERISA), it was designed to be a tool for the average person to fight inflation and taxation in order to be able to retire comfortably. To keep IRAs from becoming just another savings account, it had certain restrictions placed on it and it was given a tax-favorable status. Age restrictions were also put in place so people would save them for retirement.

The IRA's phenomenal tax-advantaged status was further enhanced by the Taxpayer Relief Act of 1997 which created the Roth IRA. The Roth IRA is now universally considered to be the supreme tool for building a comfortable retirement. However, the age restrictions were left in place so that people again would not treat the Roth IRA as just another savings account.


For IRAs, an IRA owner must start taking minimum distributions from the account at age 70. Other retirement accounts differ on the specifics but the sense of the rules are the same. At age 59 1/2, an IRA owner can start taking distributions penalty-free. Before that time there is a 10 percent penalty levied on most early distributions. The term "most" is used because there are exceptions and ways to avoid the penalties.

Learning To Take Penalty-Free Withdrawals

If you have not read IRS Publication 590 relevant to IRAs and the applicable parts of other laws governing IRAs, you should. You should also speak with an IRA advisor who can help you understand your rights as an IRA owner and how you can best use your account to your advantage. You can contact NAFEP out of Salt Lake City, Utah, to learn more about the endless possibilities available with a self-directed IRA LLC.

Written By Scott Janko, The National Association of Financial and Estate Planning (NAFEP)

For more details on the Self Directed IRA visit www.nafep.com.

By: Scott Janko

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Scott Janko 801-266-9900 www.nafep.com scott@nafep.com