Dividend payout

[Scout]

Are dividend payments from an IRA account subject to a 10% penalty if taken in your 40’s? I know there are multiple ways to get access to an IRA without penalty, but I’m just curious about dividend payouts specifically. I’m in the early phases of planning a withdrawal strategy and trying to see what I can use before selling assets. Thanks

 

[eroscott]

Are dividend payments from an IRA account subject to a 10% penalty if taken in your 40’s? I know there are multiple ways to get access to an IRA without penalty, but I’m just curious about dividend payouts specifically. I’m in the early phases of planning a withdrawal strategy and trying to see what I can use before selling assets. Thanks

https://finance.zacks.com/dividend-payments-ira-8682.html

Tax Considerations
Electing to receive the dividends earned in your IRA will be claimed as IRA withdrawals for tax purposes. The dividends would not be reported as investment dividends. IRA withdrawals are taxed as regular income, with the possibility of an extra 10 percent tax penalty if you start receiving the dividends before age 59 1/2. The IRA sponsor will send you a Form 1099 at year-end that shows the income nature of your IRA dividend withdrawals.

 

[DrRoy]

In a word, Yes.

 

[Spock]

I've heard you can withdraw ROTH interest/dividends, but not the base contributions, without penalty before 59 1/2.

 

[Scout]

Thank you

 

[RunningBum]

I've heard you can withdraw ROTH interest/dividends, but not the base contributions, without penalty before 59 1/2.

I'm pretty sure you have that backwards.

 

[VanWinkle]

I'm pretty sure you have that backwards.

Correct, contributions are penalty free, interest and dividends pre 59 1/2
are penalized.

 

[VanWinkle]

"Roth IRA Distribution Table"

UNDER AGE 59.5
FIVE YEAR CONVERSION HOLDING PERIOD NOT MET

Contributions: Tax-No; Penalty-No
Conversions: Tax-No; Penalty-Yes (Taxable Portion)
Conversions: Tax-No ;Penalty-No (Nontaxable Portion)
Earnings: Tax-Yes; Penalty-Yes

UNDER AGE 59.5
FIVE YEAR CONVERSION HOLDING PERIOD MET

Contributions: Tax-No; Penalty-No
Conversions: Tax-No; Penalty-No (Taxable Portion)
Conversions: Tax-No; Penalty-No (Nontaxable Portion)
Earnings: Tax-Yes; Penalty-Yes

OVER AGE 59.5
LESS THAN FIVE YEARS SINCE OPENING FIRST ROTH IRA

Contributions: Tax-No ;Penalty-No
Conversions: Tax-No; Penalty-No (Taxable Portion)
Conversions: Tax-No; Penalty-No (Nontaxable Portion)
Earnings: Tax-Yes; Penalty-No

OVER AGE 59.5
FIVE YEARS OR MORE SINCE OPENING FIRST ROTH IRA

All Distributions Are Qualified
No Taxes
No Penalties

 

[Spock]

I'm pretty sure you have that backwards.

Could be. Up until about 2 weeks ago I thought it was 59 1/2 full stop.