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Does the early distribution penalty apply to distributions from an inherited IRA?
Last Updated December 17, 2015
An individual inherited an IRA from his father. He is now twenty eight (28) years old. He wants to withdraw a portion of the inherited IRA balance to pay higher education expenses and to cover living expenses. Will he owe the 10% early distribution penalty since he is under age 59 ½?
Please check with the IRA Custodian to ensure that the account is properly registered as an inherited IRA, in the names of the decedent and the beneficiary, using the social security number/tax identification number of the beneficiary. One of the most common mistakes made with inherited IRAs is incorrect registration ( titling), which can cause complications for the account holder and other interested parties.
Question answered by by Denise Appleby