A. Many pre-retirees or early retirees have a worry - what if I have a financial emergency that compels an early withdrawal from my retirement account? The income tax hit alone is painful but, unless an exception applies, the additional 10% penalty for those (usually) under age 59 1/2 applies salt in the wound.
The good news is that tax law provides exceptions to such penalties — for example, for employees over age 55 and age 50 who withdraw from company plans after separating from service. But it’s important to know that not every exception applies to every type of retirement plan.
The table below summarizes such legal exceptions -