What is the 59 1/2 rule early withdrawal penalty tax?

The 59 1/2 Rule early withdrawal penalty tax is in addition to any regular income tax you will pay on the early distribution. You may be able to avoid a 10% penalty tax if your withdrawal falls under any of the exceptions to the 59 1/2 rule. The 7 most commonly used exceptions to the 59 1/2 rule are:

Do you pay tax on IRA withdrawals if you're under 5912?

Withdrawals taken from a traditional IRA before you are age 59½ are called early distributions. Generally, if you are under age 59½, you must pay a 10% penalty tax on the distribution of any assets (money or other property). The 59 1/2 Rule early withdrawal penalty tax is in addition to any regular income tax you will pay on the early distribution.

When do 401(k) withdrawals have to be 55?

The rule that requires you to be age 55 applies to the date your employment with a company stops—not the date you started taking 401 (k) distributions. For example, if you retire at age 50 instead of waiting until 58 or later, you’ll need to pay the penalties for any withdrawals before you are 59 ½.