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SIMPLE IRA Plan FAQs - Distributions

May I withdraw amounts held in my SIMPLE IRA at any time?

Yes. Your employer can't require you to retain any portion of the contributions in your SIMPLE IRA or otherwise impose any withdrawal restrictions.

What are the tax consequences when I withdraw amounts from my SIMPLE IRA?

Generally, the same tax results apply to distributions from a SIMPLE IRA as to distributions from a regular IRA. However, a special rule applies to a distribution received from a SIMPLE IRA during the 2-year period beginning on the date on which you first participated in your employer’s SIMPLE IRA plan. Under this special rule, if the additional income tax on early distributions applies to a distribution within this 2-year period, then the rate of additional tax under this special rule is increased from 10 percent to 25 percent. If one of the exceptions to application of the early distribution tax under section 72(t) applies (for example, for amounts paid after age 59 1/2, after death, or as part of a series of substantially equal payments), the exception also applies to distributions within the 2-year period and the 25-percent additional tax does not apply.

When does the "2-year period" begin?

The 2-year period begins on the first day on which your employer deposits contributions in your SIMPLE IRA.

For additional distribution FAQs see IRA FAQs.

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Page Last Reviewed or Updated: 18-Aug-2014