Ask The Experts: Plan to Eliminate IRA Withdrawal Penalties?
As a result of the rapid decline in the economy I quickly went into debt, which has never happened to me before. Although I have changed my lifestyle and have been able to avoid going further into debt, I am not able to get out from under the $25K debt that I already have. I see no way of being able to do so unless the government has a plan to allow withdrawl from an IRA account with little or no penalty. Any chance of this happening and how might such a plan work? –Susan, Chicago
I am aware of a suggestion being floated in Washington that would allow IRA owners under the age of 59.5 to make withdrawals without facing the 10% early withdrawal penalty. Perhaps there would be a short 12 month or 24 month window of opportunity. Your withdrawal would still be taxed as ordinary income but not paying the 10% penalty would be a nice benefit for cash-strapped Americans. When Obama takes office next month, I'm sure it will get a fresh look because the government neeeds every dollar it can get it hands on. Stay tuned!
Bill Losey, CFP®, CSA, America's Retirement Strategist®, is the resident retirement planning
expert on CNBC’s “On the Money”. He has been named one of America’s Top Financial Planners and is the author of Retire in a Weekend! The Baby Boomer’s Guide to Making Work Optional. He also publishes Retirement Intelligence, a free weekly award-winning newsletter. Bill can be reached online at www.MyRetirementSuccess.com.