Ok, not wood related but I figured someone here has either gone through this or at least looked into it.
Situation is that we are probably going to cash in a small IRA early, as with my income not increasing with the economy, and three kids eating more and more. (Please no lectures about having three kids and not being able to afford....even though I understand its a just point)
So after reading online, I am still confused with the 10% early withdrawal pentaly...is it truly a penalty? or is it just an extra withholding of another 10%??
I know that there are dangers of the early withdrawal, but we are only one year away from my wife going back to work and having a second income again after 10 years.....we made it a long 9 years, but I think this upcoming year is going to bust us over the edge.
The main reason I ask about an additioanl withdrawal or an actual penalty is that I had some capital gains from sale of stock this year, and where we normally get back about $2000 in federal, we are proobably just going to break even due to the taxes on the capital gains. I was thinking that the extra withholding may work in our advantage, but I am thinking that this is not the case and its a true 10% penalty and not just extra withholding.
Ps, In addition, th IRA is down 17% of the original cost basis, so was hoping that this would offset some of the capital gains of the stock sale
Situation is that we are probably going to cash in a small IRA early, as with my income not increasing with the economy, and three kids eating more and more. (Please no lectures about having three kids and not being able to afford....even though I understand its a just point)
So after reading online, I am still confused with the 10% early withdrawal pentaly...is it truly a penalty? or is it just an extra withholding of another 10%??
I know that there are dangers of the early withdrawal, but we are only one year away from my wife going back to work and having a second income again after 10 years.....we made it a long 9 years, but I think this upcoming year is going to bust us over the edge.
The main reason I ask about an additioanl withdrawal or an actual penalty is that I had some capital gains from sale of stock this year, and where we normally get back about $2000 in federal, we are proobably just going to break even due to the taxes on the capital gains. I was thinking that the extra withholding may work in our advantage, but I am thinking that this is not the case and its a true 10% penalty and not just extra withholding.
Ps, In addition, th IRA is down 17% of the original cost basis, so was hoping that this would offset some of the capital gains of the stock sale