Different companies will have their own versions of the form for you to fill in. Speak to the HR department and ask them to provide the correct form for you.

Your employer is required to provide you with all the information you need to make a withdrawal. This will include the contact details for the financial institution which manages your SIMPLE IRA. [3] X Trustworthy Source Internal Revenue Service U. S. government agency in charge of managing the Federal Tax Code Go to source

Most plans will take 4 to 6 weeks to process your withdrawal. For faster processing, elect to have your money deposited directly into your checking account. You will receive a receipt in the mail for your taxes to indicate that you’ve removed money from your IRA.

For example, let’s say you take out $3,000 and your tax rate is 22%. After the 10% penalty is applied (which is $300 on a $3,000 withdrawal), you will receive $2,700. Your 1099 or W-2 will say you made $3,000 more on top of your normal income. At 22%, that $3,000 will lead to $660 in additional taxes. Thus, your total return from the $3,000 withdrawal will be $2,040.

So, let’s say you take out $3,000 and your tax rate is still 22%. The 25% penalty will take $750 off of the top, so you’ll have $2,250 to spend as you see fit. At the end of the year, your tax bill will be $3,000 higher, leading to $660 in additional taxes. As a result, your overall return on the withdrawal will be $1,590.

So, if you expected to receive $2,250 back and you only see $2,120 in your account, it’s likely that the state you live in took a piece out for your state income taxes. You won’t see any money taken out by your state if you live in AL, AK, AZ, CO, FL, HI, ID, KY, NV, NH, ND, OH, PA, SC, SD, TN, TX, WA, or WY. Every other state has some kind of withholding process for early IRA withdrawals.

This age threshold applies to every kind of tax-sheltered retirement account. If you have a 401k, Roth IRA, or traditional IRA, the same age threshold exists.

You will pay a 50% excise tax on whatever your required withdrawal amount was. There’s a formula for your required minimum distribution amount. You can find this information on the IRS’s website, here.

The fund manager may ask you for documentation to demonstrate that you qualify for the exemption. Whoever is managing the fund is legally required to file the transaction with the state and federal governments. Even if you qualify for an exemption, they won’t know you’re exempt if you don’t let them know ahead of time.

You are permanently disabled. You become unemployed and you want to use the IRA funds to pay for health insurance. You have medical bills that add up to more than 10% of your adjusted gross income on your tax return for the year (this changes to 7. 5% if you or your spouse is 65 or over).

College tuition. Room-and-board for your college. Equipment for school, including computers, internet access, books, etc. You can also use these funds to pay for a child’s or spouse’s post-secondary education expenses.

If you are in the first two years of your SIMPLE IRA, you can only transfer money to another SIMPLE IRA. If you make a transfer to a different account, it is considered a withdrawal. In this case you will be required to include the amount in your gross income. You cannot transfer funds from a SIMPLE IRA to a Roth IRA or Roth 401k. With Roth accounts, you pay taxes before the money goes into the account, not after, so you aren’t allowed to roll the funds penalty-free. [14] X Research source

Most IRA funds are invested, as well. If you’re getting an average return of 10% a year (the yearly average for the S&P 500), even a small withdrawal could be costly in the long run when you take compounding growth into account. [16] X Research source

Do not do this if you have no means to pay off the credit card debt, since this kind of debt can snowball quickly.