Here's What You Need to Know Before Withdrawing Money From Your IRA
One of the key pieces to retirement planning is understanding when and how much you can withdraw from your account.
Your individual retirement account comes with rules about when you can withdraw money and how much you must withdraw each year.
Understanding IRA withdrawal rules is vital if you want to avoid paying penalties.
Why Are There IRA Withdrawal Rules?
It's your money, so why are there rules about withdrawing from an IRA?
The government offers you a tax benefit when you invest using an IRA. As a result, the government expects you to use this tax-advantaged money for its intended purpose — retirement — and sets rules accordingly.
When you break the IRA withdrawal rules, you are subject to a penalty. This penalty can be hefty, depending on the circumstances. Additionally, the penalty depends on the type of IRA you have. There are slightly different rules for traditional and Roth IRA accounts.
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