Withdrawing Money Early from Tax-Deferred Investments: An Interview with Advanced Financial Concepts (Part 2 of 2)

In the first part of our interview with Justin F. Shaw of Houston-based Advanced Financial Concepts, we discussed the retirement accounts to which the IRS applies tax penalties and the existence of circumstances in which those penalties do not apply. In the second half of the interview, our source went a little further into what those circumstances are:

Q: So it is possible to take an early distribution from an IRA without paying a penalty?

A: Only in certain situations. For instance, if an IRA owner dies, his or her beneficiaries can take distributions without penalties. Part of the purchase of a first home and some medical expenses can also be paid for from IRAs without penalties.

Q: And how about from employer-sponsored retirement plans?

A: Many of the same conditions apply, but investors in employer-sponsored plans can also sometimes take penalty-free distributions if they no longer work for the employer, received excess contributions, or made excess elective deferrals.

That wraps up our interview. As always, talk to a qualified financial professional before making any investment decisions.

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