Business and Personal Finance Dictionary

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• EARLY WITHDRAWAL
  
  If you withdraw assets from a fixed-term investment, such as a certificate of deposit (CD), before it matures, or from an individual retirement account (IRA) or tax-deferred retirement savings plan before you turn 59 1/2, it is generally considered an early withdrawal. If you withdraw early, you usually have to pay a penalty imposed by the issuer (in the case of a CD) or by the federal government (in the case of an IRA or other tax-deferred or tax-free savings plan). However, you may be able to use the money in your account without penalty under certain circumstances. For example, if you withdraw IRA assets to pay for higher education or to buyf a first home, the penalty is waived though taxes are due on the tax-deferred portion of the withdrawal.
  
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