Regardless of your age, you'll need to file a 1040 form and show the amount of the IRA withdrawal. When you make a distribution from a traditional IRA, the IRS considers it to be 100% taxable income. That means you'll owe ordinary income taxes on the total amount of the distribution. To determine the exact amount of taxes you'll owe, it is important to compare different types of IRAs using a Gold IRA comparison chart.
You must subtract federal and state income tax percentages from the total distribution. Your Roth IRA withdrawals are tax-free as long as you're 59 and a half or older and your account is at least five years old. Withdrawals from traditional IRA accounts are taxed as regular income, depending on the tax bracket of the year in which you make the withdrawal. There are some exceptions due to financial hardship to the penalties for withdrawing money from a traditional IRA or from the investment earnings portion of a Roth IRA before turning 59 and a half years old. There are several IRA options and many places to open these accounts, but the Roth IRA and the traditional IRA are by far the most popular types.
The IRS exceptions are a little different for IRAs and 401 (k) plans; they even vary slightly for different types of IRAs. The other time you risk receiving a tax penalty for withdrawing money early is when you transfer money from one IRA to another qualified IRA.
