Articles on Stock markets

News, Research and Analysis

Help Center
Investment Portfolios
Investment Terminology and Instruments
Technical Analysis and Trading
Cryptocurrencies and Blockchain
Retirement Accounts401(k) and 403(b) PlansIndividual Retirement Accounts (IRA)SEP and SIMPLE IRAsKeogh PlansMoney Purchase/Profit Sharing PlansSelf-Employed 401(k)s and 457sPension Plan RulesCash-Balance PlansThrift Savings Plans and 529 Plans and ESA
Personal Finance
Corporate Basics

What if I Need the Money in My IRA Before Retirement?

It is possible to withdraw money from an Individual Retirement Account without incurring a penalty, but it should be used as a last resort.

If you withdraw the money before age 59½, you will pay both a 10% penalty and regular income taxes on the amount you withdraw from a Traditional IRA.

However, there are special circumstances that allow you to make withdrawals without being charged the 10% penalty. These circumstances might include: paying for college expenses (whether for you, your grandchildren, etc.), paying for costs associated with a disability, medical expenses (must be greater than 7.5% of your adjusted gross income), and first-time home purchase.

You also have the option of taking 72(t) distributions from an IRA, which basically annuitizes your IRA. Substantially equal payments must follow a set a rules to be exempt from the early withdrawal penalty, and can be done with an annuity product or just systematic withdrawals.

Keywords: taxation, retirement accounts, 10% penalty, annuitize, early withdrawals,