How are traditional IRA distributions taxed?



IRA distributions are taxed in a few different ways. The first is that if you make a withdrawal before you turn 59 1/2, you may have to pay a 10% early withdrawal penalty. The second way is that your distribution is added to your taxable income for the year and is taxed at your marginal tax rate.

There are a few different ways to avoid paying taxes on your traditional IRA distributions. The first is to make a withdrawal after you turn 59 1/2. The second is to make a withdrawal that is considered a life-event, such as death, disability, or using the money for qualified medical expenses. The third way is to take a withdrawal that is rolled over into another retirement account within 60 days.

No matter when you make a withdrawal from your traditional IRA, you will need to pay taxes on the distribution. The best way to avoid paying taxes on your traditional IRA distributions is to make sure you are taking the money out after you turn 59 1/2 or that you are taking a withdrawal for a life-event.



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