Penalties for cashing out on a SIMPLE IRA early

Question

I want to know what are the penalties that an individual will face if they withdraw on a SIMPLE IRA outside of a hardship distribution?

(Additionally) I noticed in another post someone mentioned a '2-year rule' as well. If there is such a thing, how does it factor into this equation?

The standard penalty for early non-hardship withdrawal of any (non-basis) amount from a Traditional IRA or earnings from a Roth IRA is 10% of the amount withdrawn in addition to income tax on the amount. Do you have any reason to believe that withdrawals from a SIMPLE IRA have different penalties? Also could you include a link to the posting that mentions a '2-year rule' so that everyone reading this is on the same page? — Dilip Sarwate, Commented Nov 16, 2012 at 15:25
I suppose I should add if there are any differences as I'm unaware that all IRAs follow the same guidelines when it comes to penalties. Here's the link to the mention of a '2-year rule' on SIMPLE IRAs: money.stackexchange.com/questions/7848/… — Anthony Miller, Commented Nov 16, 2012 at 16:20

JTP - Apologise to Monica · Accepted Answer · 2012-11-19 18:07:24Z

3

The 2 year rule means that the penalty will be 25% in addition to your ordinary income tax rates, not the standard 10%.

Other than that its exactly the same as a traditional IRA.

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answered Nov 16, 2012 at 19:30

littleadv

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