Team photo
Centuria Financial Group


David P. McCabe,


Financial Planner


Nathaniel D. High, RICP®

Financial Planner


Nicholas J. Over, CFP®

Financial Planner


Sara E. Martin

Client Relations Manager


Jennifer A. McCabe

Client Relations Specialist


Centuria Financial Group

2333 Baltimore Blvd Suite B

Finksburg, MD 21048


Phone:  443-952-7232

November/December 2022

New IRS Rules for Early Withdrawals

New IRS Rules for Early Withdrawals

Withdrawing money from a retirement account before age 59½ typically comes with a 10% early withdrawal penalty. One way to avoid the penalty is by taking "substanially equal periodic payments" (SEPP). Once payments begin, they must continue for five years or until you reach age 59½, whichever is longer.

The Old Rules
In the past, withdrawals were based on your life expectancy plus a rate of interest that could fluctuate each month. The changing interest rate made budgeting difficult.

The New Rules
In January 2022, the IRS set the base interest rate as any rate that is not more than five percent. The ruling means that individuals who choose to make withdrawals under a SEPP arrangement can make larger withdrawals with more predictable payments.

Other Ways to Avoid the Penalty
A SEPP arrangement isn’t the only way to withdraw funds from retirement accounts without incurring the 10% early withdrawal penalty. Depending on your personal circumstances, you can:

  • Withdraw up to $10,000 from a traditional IRA for a first-time home purchase. If you’re married, your spouse can also withdraw $10,000 from his/her own IRA.

  • Take Qualified Education Expense withdrawals from a Roth IRA to pay qualified education expenses for yourself or your dependents.

  • Withdraw money from an IRA to pay unreimbursed medical expenses that exceed 10% of your adjusted gross income.

  • Withdraw funds from an IRA to pay health insurance premiums if you lose your job and collect unemployment benefits for at least 12 weeks.

  • Take an IRA distribution to supplement SSDI benefits for a disability whose severity is confirmed by a physician.

  • Take a 401(k) loan for the lesser of 1) $10,000 or 50% of your vested account balance, whichever is larger, or 2) $50,000.

  • Withdraw money from an inherited IRA before age 59½, but you’ll owe income taxes on the withdrawal.

  • Withdraw contributions — but not earnings — from a Roth IRA.

Ideally, money should remain invested in your retirement accounts until you’re ready to use it in retirement. However, as a last resort, you do have options for making penalty-free early withdrawals if you absolutely need the funds.



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Centuria Financial Group is not affiliated with Prudential Financial. Centuria Financial Group sells insurance products of Prudential Financial's affiliated insurance companies in addition to products of non-affiliated insurance companies. Centuria Financial Group is authorized to sell and service certain insurance products of Prudential Financial companies as well as use this material. Centuria Financial Group and its representatives do not give tax or legal advice. Please consult with your own advisors regarding your particular situation. Offering financial planning and investment advisory services and programs through Pruco Securities, LLC (Pruco), under the marketing name Prudential Financial Planning Services (PFPS), pursuant to a separate client agreement. Offering insurance and securities products and services as a registered representative of Pruco, and an agent of issuing insurance companies. 1-800-778-2255. Sara E. Martin and Jennifer McCabe are employed by David McCabe and not The Prudential Insurance Company of America or its subsidiaries.
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