What are the exceptions to the early distribution penalty for a non-qualified Roth IRA distribution?

The exceptions are as follows:

  • The distribution is made on or after the date you reach age 59.5
  • The distribution is made while you are disabled and you can furnish proof that you cannot do any substantial gainful activity because of your physical or mental condition. A physician must determine that your condition can be expected to result in death or to be of long, continued and indefinite duration.
  • The distribution is part of a substantially equal periodic payment (SEPP).
  • The distribution is made by your beneficiary after your death.
  • The distribution is made as a result of an IRS levy.
  • The distribution is used for a first-time home purchase for you or an eligible family member (subject to a lifetime limit of $10,000). This includes expenses to build or rebuild a first home.
  • You have unreimbursed medical expenses that are not more than (a) the amount you paid for unreimbursed medical expenses during the year of the distribution, or (b) minus 7.5% of your adjusted gross income for the year of the distribution.
  • You are paying medical insurance premiums for yourself, your spouse and your dependents after losing your job and:
  • You received unemployment compensation paid under any federal or state law for 12 consecutive weeks because you lost your job.
  • You receive the distributions during either the year you received the unemployment compensation or the following year.
  • You receive the distributions no later than 60 days after you have been reemployed.
  • The distributions are not more than your qualified higher education expenses.
  • The distribution is attributed to amounts that were non-taxable when converted.
  • The distribution is attributed to amounts that have been converted for at least five years.
  • To learn more, read Avoiding IRS Penalties On Your IRA Assets.

    Question answered by Denise Appleby, CISP, CRC, CRPS, CRSP, APA