Question

Jonas Kramer is 80 years old and has an IRA with a fair market value of $350,000. What penalty would he have incurred if he had made an early withdrawal of $25,000 to pay for a grandchild’s college education?

Answer 1

Mr. Kramer will not have to pay any penalty, as he is older than 59 1/2 years old. Once you are older than this age, you do not have to pay a penalty on any withdrawals from your IRA, although income tax will be applied to the withdrawal.