Generally, there is no set penalty for early withdrawal from a mutual fund. However, there are circumstances, based on when and how the mutual fund was purchased, that could result in financial consequences when the money is withdrawn.
A penalty could be incurred if the mutual fund was purchased as a traditional IRA and you withdraw the funds before you are 59 1/2. Besides paying your regular income tax on the amount withdrawn, the IRS imposes an additional 10 percent penalty. A penalty may also result based on the class of mutual fund share purchased. Mutual fund Class B shares are normally sold with a deferred sales charge, which you must pay if you withdraw funds before the end of the stated period. You can check with your mutual fund company to determine if your withdrawal will be subject to this penalty.
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