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The Truth About Protecting Your IRAs and 401(k)s by Steve Weisman

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Truth 8 Withdrawal pains

Putting money into a traditional IRA is not a particularly difficult task. Uncle Sam, in fact, encourages you to save for your retirement by providing, in some circumstances, a tax deduction and tax deferral on the income earned by money invested in a traditional IRA. But when it comes to taking that money out before the magic age of 59 1/2, your rich uncle is much less cooperative. Withdrawals from a traditional IRA before you reach the age of 59 1/2 not only results in your having to pay income tax at ordinary income tax rates on the funds you withdraw, but in addition, you will be hit with a 10% excise tax as well.

Fortunately, there are loopholes.

Taking substantially equal yearly payments made over ...

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