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When you withdraw from an IRA Money Market Account, do you have to pay taxes? |
When you withdraw from an IRA Money Market Account, do you have to pay taxes? Yes. For the most part. If you are under age 59 1/2 and do not qualify under any of the "exception rules", you will owe a penalty and ordinary income tax at your current rate. Assuming that you are talking about a Traditional IRA. However, if you have a Roth IRA, you can take out your contribution after 5 years without a penalty or taxes. There are quite a few exceptions (medical bills, educational tuition, disability.........) so check to see if you qualify. Only take out the money if you really have to. Source(s): www.irs.gov and years as a tax preparer/financial advisor Yes Yes, and if you are young (under 65 yrs old) you'll have to pay an 'early withdrawl penalty' as well! the age is 59 1/2, not 65. and you pay tax on the interest income you've accumulated. If you are over 59 1/2 and the IRA is a Traditional IRA, you pay tax on the withdrawal at your income tax rate. If it is a Roth IRA and you are 59 1/2 there is no tax consequence. If you are under 59 1/2 there is a 10% penalty in addition to whatever the tax treatment is. 24 years in the investment business |
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