IRS Publication 590-B: Distribution from IRAs

What Is IRS Publication 590-B?

IRS Publication 590-B explains the tax implications of withdrawing money from any type of individual retirement account (IRA) before or after retirement. It specifies when you can't withdraw money without paying a penalty and when you must withdraw money.

The publication includes three chapters, several appendices, and worksheets to assist the taxpayer. Publication 590-A covers the tax rules for contributing to retirement accounts.

Understanding IRS Publication 590-B

There are several types of IRAs, including the traditional IRA and the Roth IRA, the SEP, and the SIMPLE IRA. But the big distinction is between the traditional and the Roth IRA:

An IRA distribution for higher education expenses or a first-time home purchase is not subject to the 10% early withdrawal penalty.

IRS Publication 590-B is organized to explain the different tax implications of these two types of IRA accounts:

Penalties and Exemptions

Keep an eye on the penalties detailed in Publication 590-B, and the exceptions to those penalties. For example, most early distributions trigger a 10% penalty. The penalty goes up to 25% if money is withdrawn during the first two years of participation in a SIMPLE IRA. However, a withdrawal for qualified higher education expenses or first-time home purchase is not subject to the penalty.

Other Publications

The IRS has numerous publications explaining the ins and outs of qualified retirement plans.