A retirement plan is a plan to provide you with a source of income once you retire from your job. Some plans require that both employer and employee contribute towards it.
Others don’t require the employee to contribute. Typically, once you reached retirement age – at about the age of 59 and a half, you can begin to withdraw money from, for example, your 403 b retirement plan without triggering penalties. The money that you withdraw become taxable income at that point.
If you withdraw the money before you reach 59 and 1/2 , however, in addition to the income tax that you will incur, you will have to pay an additional 10% early withdrawal penalty fee. Although there are special hardship situations where you can avoid the early penalty fee, before doing so you should talk to your financial advisor to ensure that you’re getting the most up to date information.
Related posts:
Comments on this entry are closed.