You Asked Us - Early Distribution Penalty

Send this Q&A to a friend

Q: An individual inherited an IRA from his father.  He is now twenty eighth (28) years old. He wants to withdraw a portion of the inherited IRA balance to pay higher education expenses and to cover living expenses. Will he owe the 10% early distribution penalty since he is under age 59 ½?

A: Distributions from an inherited IRA are never subject to the 10% early distribution penalty, regardless of the purpose for which the distribution amounts are used. Just to be on the safe side, ensure that the IRA custodian/trustee has properly registered the account as an inherited IRA, in the name of the decedent and the beneficiary, using the social security number/tax identification number of the beneficiary.

You may find this question on the registration requirements of inherited IRAs helpful

Back to Early Distribution Penalty  FAQ

Featured Product/s

• RetirementWorks® II ("RW2")
• Appleby Cheat Sheets .