Waynesboro, Virginia
201 Osage Ln Suite 1
Waynesboro, VA 22980

Retirement Planning: How Does an Early Withdrawal Affect Your Taxes? March 2, 2017

Waynesboro, Waynesboro
Retirement Planning: How Does an Early Withdrawal Affect Your Taxes?, Waynesboro, Virginia

Financial emergencies happen all the time. If you are maxed out and tempted to withdraw money from your retirement account, though, think again. All the hard work you put into retirement planning can be stymied by the tax penalties you pay on any money you withdraw early from a retirement fund. You can make a withdrawal if needed, but before you do, consult with the professionals at Weaver Insurance & Financial Advisors in Waynesboro, VA, to learn how this move could affect your retirement picture.

Here are a few of the ways you can be penalized:

  • 25% Tax: Any retirement money you take out before the age of 59 1/2 will be counted as regular income and taxed as such. So, if you are in the 25% tax bracket, that means for every dollar you take out, you lose 25 cents. That can really add up.
  • virginia retirement planning10% Penalty: On top of the regular taxes, Uncle Sam takes a hefty 10% off early withdrawals as a penalty fee. This can really upset your retirement planning and leave you with a surprisingly big bill. 
  • Loss of Compound Interest: It has taken years of retirement planning and sacrifices to achieve your dreams. As any good investment advisor will tell you, you won't just lose the capital and interest you have made, but also the increased ability to achieve compound interest. Dipping into your savings early will mean a big setback for your interest gains.

If you are considering withdrawing from your 401k, IRA, or other retirement savings account due to a financial emergency, contact a financial planner first to see if there is some other way to achieve your goals. To learn more, call Weaver Insurance & Financial Advisors in Waynesboro at (540) 943-1221. Visit their website for additional information on all the ways they can help you with financial and retirement planning.

Other Announcements, Events and Deals from Weaver Insurance & Financial Advisors
How Charitable Gifts Affect Your Taxes, Waynesboro, Virginia
You may already know that you can deduct charitable gifts on your tax return. To protect you from an audit, though, you need to understand just how those donations will impact your t...read more
Common Errors Made in Retirement Planning , Waynesboro, Virginia
Retirement planning is the key to enjoying financial freedom in your golden years. One small step at a time, the proper preparation will ensure your future is secure and your retirem...read more
4 Tips for Purchasing Insurance for Cars , Waynesboro, Virginia
Whether you are shopping for your first auto insurance policy or looking for less expensive coverage, going online makes it easy to find the best insurance for cars at an affordable ...read more
Waynesboro’s Top Financial Advisors Explain How Taxes Are Impacted by Investments, Waynesboro, Virginia
Investing is an effective method that many people use to quickly grow their money and successfully reach their retirement planning and other monetary goals. However, without the assi...read more