Keep in mind the following considerations regarding tax rates and penalties:

• Pretax contributions and any earnings distributed prior to age 59 ½ from tax-deferred accounts such as IRAs, annuities, 401(k)s and other qualified plans are subject to ordinary income taxes and, unless an exception applies, a 10% penalty. In addition certain qualified plans, such as 401(k)s, require that 20% be mandatorily withheld as prepayment of federal income taxes.
• One common exception to the early withdrawal penalty is for assets withdrawn from your employer's qualified plan if you separated from service from that employer at age 55 or older.
• Roth IRAs are not subject to minimum required distribution rules during your lifetime.
• Qualified dividends and long-term capital gains are currently taxed at the federal level at a maximum rate of 15%. Interest and short-term gains are taxed at ordinary income tax rates, which at the federal level, are currently as high as 35%. Pretax contributions and any earning from tax-deferred accounts are taxed as ordinary income when distributed.
• Unless applicable provisions of current tax law are extended by legislation, starting in 2009, the maximum federal long-term capital gains tax rate will rise to 20% and qualified dividends will be taxed as ordinary income; starting in 2011, the highest federal ordinary income tax rate will rise to 39.6%.

These and other tax considerations can get complex. Be sure to consult with a tax professional before making any withdrawal decisions based on taxes.