Funds may or may not be available for withdrawal depending on your retirement plan or employment status. If you decide to take an early withdrawal, the IRS requires that we withhold 20% for federal income taxes. Your withdrawal may also be subject to state income taxes. Also, if you are under age 59 1/2, except for certain exceptions, there will be an additional 10% early withdrawal penalty that the IRS imposes for early distribution. You will pay this penalty when you file your income taxes for the year; however, you can request additional withholding at the time of distribution and this will be sent to the IRS along with the federal income tax.

In many cases, the standard 20% withholding that the IRS imposes is not enough to cover the taxes you will owe on the withdrawal. The amount you will owe in taxes will depend upon a number of variables, including your Adjusted Gross Income, tax bracket, and the number of dependents you have. If you have more questions, we recommend you speak to a competent tax advisor.