How to Take Hardship Distributions from Self-Directed IRAs

Share Article

The course of retirement never did run smooth, which is why there are options allowed within IRS rules for “hardship distributions.” In a recent blog post at American IRA, CEO Jim Hitt explained how to take these hardship distributions from Self-Directed IRAs.

American IRA CEO

American IRA CEO, Jim Hitt

The rules for Self-Directed IRA hardship distributions are the same as those for conventional Traditional IRAs

Life sometimes gets in the way of retirement. That is the idea behind “hardship distributions,” which allow those with retirement savings to take out some of their retirement to help cover the costs of emergency circumstances in their personal life. But these hardship distributions can be confusing, especially for those with a Self-Directed IRA. That is why Jim Hitt, CEO of American IRA, recently wrote a how-to guide for understanding hardship distributions when self-directing.

“The rules for Self-Directed IRA hardship distributions are the same as those for conventional Traditional IRAs,” writes Jim Hitt. He then went into detail as to the specific circumstances in which these distributions could be taken with minimal financial impact, including: death, disability of the taxpayer, withdrawing to avoid a foreclosure or eviction, or to pay health insurance premiums when unemployed. For a full list of these hardship circumstances, visit the site of the blog post at AmericanIRA.com.

What concessions are made with a hardship distribution? The distribution’s penalty is waived, but it does not mean income taxes are going away. Jim Hitt notes in the post that growth on the retirement contributions will still be taxed as income. But the heavy fees of taking early distributions from retirement are waived during these special conditions of hardship.

“People with Self-Directed IRAs sometimes worry that their funds will never be available to them,” says Jim Hitt. “And that is true to an extent: retirement investors should consider their retirement separate from their usual accounts. But it does not mean that there are no circumstances in which you can access that retirement money. These hardship distributions make it possible to pull money from retirement in emergency circumstances. It is not the ideal solution, but for some people, it may be the only way to avoid even worse problems with their finances.”

According to Jim Hitt, it is important to weigh options before considering these hardship distributions. The money left in a retirement account can continue to grow with tax protections. “Hardship distributions” could also be called “emergency” distributions for that reason.

For more information on Self-Directed IRAs, hardship distributions, and American IRA, visit the blog at http://www.AmericanIRA.com or call 866-7500-IRA.

About:
American IRA, LLC was established in 2004 by Jim Hitt in Asheville, NC.
The mission of American IRA is to provide the highest level of customer service in the self-directed retirement industry. Jim Hitt and his team have grown the company to over $400 million in assets under administration by educating the public that their Self-Directed IRA account can invest in a variety of assets such as real estate, private lending, limited liability companies, precious metals and much more.

As a Self-Directed IRA administrator they are a neutral third party. They do not make any recommendations to any person or entity associated with investments of any type (including financial representatives, investment promoters or companies, or employees, agents or representatives associated with these firms). They are not responsible for and are not bound by any statements, representations, warranties or agreements made by any such person or entity and do not provide any recommendation on the quality profitability or reputability of any investment, individual or company. The term "they" refers to American IRA, located in Asheville and Charlotte, NC.”

Share article on social media or email:

View article via:

Pdf Print

Contact Author

Sean McKay
@AmericanIRA
Follow >
American IRA, LLC
since: 01/2013
Like >
Visit website