IRA/ESA Distributions

IRA/Roth IRA
You have the option of selecting from the following choices as the reason for making your withdrawal request:

• Normal: You are age 59½ or older.
• Early with no known exception: You are under age 59½—a 10% early distribution penalty may be assessed by the IRS on your individual tax return.
• Early with exception: You're under age 59½ and a known penalty exception applies (including substantially equal periodic payments, first time home purchase, IRS levy, or qualified medical, health insurance or higher education expenses).
• Disability: Please include a copy of a physician's statement or letter from the Social Security office confirming your disability along with the required form.
• Death Beneficiary Distribution: Along with a paper-form distribution request, mail a certified copy of the death certificate for the account owner. All paperwork must be originals—no photocopies or faxes allowed.
• Removal of Excess Contribution: Requires a paper form—on the form, please indicate the amount you've over-contributed to your IRA, any applicable earnings, and the tax year associated with the contribution you wish to have distributed.

ESA
You have the option of selecting from the following choices as the reason for making the withdrawal request:

• Normal: The distribution is used for education expenses—view additional information about qualified and non-qualified education expenses.
• Disability: Please include a copy of a physician's statement or letter from the Social Security office confirming your disability along with the required form.
• Death Beneficiary Distribution: Along with a paper-form distribution request, mail a certified copy of the death certificate for the account owner. All paperwork must be originals—no photocopies or faxes allowed. We will contact you if additional paperwork is required.
• Removal of Excess Contribution: You have over-contributed to your ESA and have decided to remove the excess amount—you'll need to designate the excess contribution amount, applicable earnings and tax year associated with the contribution you wish to have distributed (requires form to be filled out).

So, you'll have to select one of the three options below when you take a distribution because the law says you have to pick a withholding preference for any distribution you take:

There are 3 options available for the Federal Withholding Election amount:

• 10% of the gross distribution amount
• No withholding or $0.00
• An amount greater than 10% of gross distribution amount

Other solid sources of information about IRAs are IRS Publication 590 and the IRS website.

Tip: Gross distribution amount— this is the amount of funds you request before any applicable taxes and/or charges.

Some states require a certain amount of taxes be withheld upon distribution. Depending on your state, the amount may be a percentage of the Federal Withholding amount or a percentage of the gross amount.

Some states make the tax withholding optional. Thus, you may not have to elect an amount to withhold prior to distribution.

If you elect to enter your own dollar amount to withhold, instead of the percentage of federal or gross distribution amount, then the dollar amount you enter needs to be higher than the state's given percentage.

Tip: You may live in a state that doesn't withhold a percentage of taxes. To find out more, check with your state's Department of Revenue.