Common use of Early Distribution Penalty Tax Clause in Contracts

Early Distribution Penalty Tax. If you take a distribution from multiple beneficiaries, a beneficiary is considered the only your IRA before reaching age 59 1/2, you are subject to a 10 beneficiary of their share of the IRA assets if separate accounting percent early-distribution penalty tax on the taxable portion of the applies. If separate accounting applies, the rules above apply based distribution. However, certain exceptions apply. Exceptions to the on the type of beneficiary (i.e., designated beneficiary, eligible 10 percent penalty tax are distributions due to death, disability, designated beneficiary, not a designated beneficiary). first-time home purchase, eligible higher education expenses,