Ask Terry Questions Early Pension Withdrawl penalties

Early Pension Withdrawl penalties

By Terry Savage on October 03, 2024 | Taxes & Economy

I am hoping you can guide me. I had some hardship in 2023 and withdrew the last of me IRA on 1/11/2024 $45,585. I paid the early tax penalty of $4,558.59 but my question is, when I do my taxes this year will I get penalized more because this put me in a higher bracket? I’m trying to make sure that I am getting enough taken out of my and my husbands check to avoid paying taxes at the end of the year.

Terry Says

Gosh, it’s a shame you had to do that. Did your custodian withhold the 10% penalty since you were under age 59-1/2?
They will remit that to the IRS.
But yes, the full amount of your withdrawal will be considered taxable income, added on top of your other income.
I suggest you see an accountant now — before yearend — to see what taxes you will owe on April 15th. That’s much better than guessing.

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