What are all the tax penalties for cashing out an 403 B retirement plan not being 59 1/2?

[jerry2000 · Accepted solution]

There is only one tax federal penalty for early withdrawal of a retirement account. That is a penalty of 10% of the amount of the withdrawal. Some states also have a penalty for early withdrawal, but the percentage depends on the state. There are 12 exceptions to the early withdrawal penalty,you can find them all on page 3 of the Instructions for Form 5329, at this link
http://www.irs.gov/pub/irs-pdf/i5329.pdf

A withdrawal from a retirement account that you funded with pre-tax money is treated as ordinary income. The amount of the withdrawal is added to your other ordinary income and taxed at whatever your marginal tax rate is. That is not a penalty, it is just paying the tax on the money that you didn't pay when you made the contributions