Typically, the IRS will impose a 10% IRA early distribution penalty on any taxable amount in your IRA, if you withdraw money from it before the age of 59½. Fortunately, there are various exceptions to this rule under which the penalty may be waived. Here’s a list of the exceptions.
- Medical Expenses – If you have medical expenses that will not be reimbursed or if you are unemployed and need the money to pay for your medical insurance.
- Disability – If you are unable to work due to a mental or physical disability.
- Education – If you need to pay for expenses for higher education for you or your family.
- Inheritance – If you are the beneficiary of an IRA of a deceased person, the amount you withdraw from the inherited IRA is penalty free.
- Home Purchase – If you are purchasing your first home.
- Equal Payments – If you need money from the IRA for a few years and are willing to withdraw the same amount at a specified interval until age 59½ or for 5 years, whichever comes later.
- IRS Levy – If you need to withdraw money as a result of an IRS levy.
- Military – If you are called to active duty.
For more details regarding these items, you can refer to information provided by the IRS at the links below: