Withdrawal Penalty

Withdrawal Penalty
Refers to any penalty incurred by an individual for early withdrawal from an account that is either "locked in" for a stated period, as in a time deposit at a financial institution, or where such withdrawals are subject to penalties by law, such as from an IRA. The penalty can be either in the form of forfeiture of interest or an actual dollar amount.

For example, an early withdrawal from a certificate of deposit at most financial institutions would result in the customer forfeiting interest for a period ranging from one month to several months. Generally speaking, the longer the term of the initial certificate of deposit, the longer the interest forfeiture period. In the case of IRAs, withdrawals before the age of 59.5 are subject to a penalty of 10%.

Investment dictionary. . 2012.

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  • penalty-free — /ˌpen(ə)lti fri:/ adjective without incurring any penalty, without losing any interest on money invested ● penalty free withdrawal …   Dictionary of banking and finance

  • Hardship Withdrawal — An emergency withdrawal from a retirement plan that may be subject to certain tax or account penalties. In the United States, funds withdrawn prior to the age of 59.5 are typically subject to a 10% Internal Revenue Service (IRS) early withdrawal… …   Investment dictionary

  • early withdrawal — /ˌɜ:li wɪð drɔ:əl/ noun the act of withdrawing money from a deposit account before the due date ● Early withdrawal usually incurs a penalty …   Dictionary of banking and finance

  • Certificate of deposit — This article is specific to the United States. For a more general article, see Time deposit. Banking in the United States Monetary policy The Federal Reserve System Regulation Lending Credit card Deposit accounts Savings account Checking account …   Wikipedia

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