When you withdraw funds from your deferred income accounts such as an Individual Retirement Account (IRA) or your 401(k) and you are under the age of 59 1/2 you could be subject to a penalty.
If you do not meet any of the Exceptions to Tax on Early Distributions you will pay a 10% penalty on the amount of the distribution
There is a maximum you you can contribute to your IRA during a tax year. In 2019 if you are under age 50 you can contribute up to $6,000. If you are 50 or older you can contribute up to $7,000. When the amount you contribute exceeds the maximum you will pay an excise penalty of 6% for each year the excess remains in the IRA.
The maximum you can contribute to your 401(k) in 2019 is $19,000. If you exceed the maximum you will pay an excise penalty of 6%.
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