In general, to withdraw funds penalty-free from an IRA you must
be at least 59½ years of age and the account must have been open
for at least 5 years. But there are several exceptions to that rule
that let you escape paying the 10% Internal Revenue Service
penalty, should you find yourself in dire need of money. You will,
of course, have to pay ordinary income tax on the earnings
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Those exceptions include:
- Unreimbursed medical expenses — To pay
unreimbursed medical expenses that are more than 7.5% of your
adjusted gross income.
- Medical insurance — To pay medical insurance
for yourself, your spouse and your dependents if you lose your
- Disabled — If you become disabled before age
59½, any distributions that you take because of your disability are
not subject to the penalty tax.
- Beneficiary — You are the beneficiary of a
deceased IRA owner.
- Annuity — You can receive distributions from
an IRA that are part of a series of substantially equal payments
over your life.
- Higher education expenses — If you paid
expenses for higher education during the year, part or all of any
distribution may not be subject to penalty.
- First home — You will not be penalized on a
distribution used to buy, build or rebuild a first home. The
distribution can’t be more than $10,000.
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