Arkansas Administrative Code
Agency 006 - Department of Finance and Administration
Division 05 - Division of Revenues
Regulation 1997-4 - Comprehensive Individual Income Tax Regulations
Rule 26-51-414 - DEFERRED COMPENSATION PLANS
Rule 5.26-51-414 - Penalty-Free Withdrawals from IRAs and Qualified Retirement Plans
Current through Register Vol. 49, No. 9, September, 2024
A taxpayer may make an early withdrawal of funds from an IRA or other qualified retirement plan free of the 10% penalty normally associated with such early withdrawals under the following two circumstances:
1 Payment of medical expenses in excess of 71/2% of the taxpayer's adjusted gross income (AGI). For example, a taxpayer's AGI is $40,000.00. 71/2% of $40,000.00 is $3,000.00. The taxpayer incurs medical expenses of $10,000.00 and makes an early withdrawal of $10,000.00 from his IRA to pay the expenses in full. The first $3,000.00 of the withdrawal would be subject to the 10% penalty. However, the remaining $7,000.00 would not be subject to the 10% penalty. IRC Sec. 72(t)(2)(B).
2 The taxpayer is unemployed at the time the withdrawal is made and meets the following criteria:
The actual retirement funds withdrawn do not have to be paid towards the health insurance premiums to qualify for the break from the 10% penalty.
