I retired at age 50 from a state agency and went to work at a private company. I receive a monthly check from my retirement. Taxes are withheld and I get a 1099-R. Tax software says I owe a early withdrawal penalty on my retirement. Is this correct?===========>>>
Correct;most withdrawals are subject to income taxes, as well as penalties if you're under age 59 1/2. Regardless of the tax status of a withdrawal,
If so, will this occur every year until I?m 59 1/2?===========>> a Form 1099-R must be completed by the IRA custodian each year that a withdrawal occurs early withdrawals must be included in taxable income for the year you made the contribution.; you need to pay penalties on the tax return; Suppose you are age 50 and say, you take $10K from your traditional IRA. Then, the $10K shows up as income on the first page of your tax return , I mean, on line 15a and 15b on your 1040.This income is included along with your other sources of income to determine the total amount of tax owed for the year when you withdrew the money.The amount of tax owed on the $10K will depend on your income tax rate, which is determined by your total income and deductions.In addition to the tax on the $10K early withdrawal, a 10% penalty tax is assessed on the withdrawal.In this scenario, that would be an additional $1K of tax owed in addition to your ordinary income taxes.
If you had at least $1K more in taxes withheld during the year than what you would need to cover your normal tax bill, then, despite the IRA early withdrawal, no additional taxes would be owed.