A:

Generally, if you are under age 59.5 and you withdraw funds from your traditional IRA, you must pay an additional 10% tax penalty on this distribution of assets. There are several exceptions to the rule, which allow you to pull funds from your IRA prior to age 59.5, and avoid the 10% penalty.


  1. Short-term use of funds from your IRA. You withdraw money from your IRA, and replace the funds within 60 days

  2. If you are disabled
  3. If you are the beneficiary of an inherited IRA
  4. If you are a first-time home buyer (up to $10,000)
  5. If you are paying the cost of medical insurance (restrictions apply)
  6. If you have unreimbursed medical expenses exceeding 7.5% of AGI
  7. If you have qualified higher education expenses
  8. If you have qualified reservist distribution
  9. IRS tax levy on the qualified plan (recapture tax for annuity method change)
  10. If you are receiving a "series of substantially equal periodic payments" under an annuity method
  11. If you have direct IRA rollover from one plan to another, completed within 60 days.

(For a more thorough analysis on the IRA fees, refer to Avoiding IRS Penalties On Your IRA Assets.)

This question was answered by Steven Merkel

Hot Definitions
  1. Demonetization

    Demonetization is the act of stripping a currency unit of its status as legal tender and is necessary whenever there is a ...
  2. Investment

    An asset or item that is purchased with the hope that it will generate income or appreciate in the future. In an economic ...
  3. Redlining

    The unethical practice whereby financial institutions make it extremely difficult or impossible for residents of poor inner-city ...
  4. Nonfarm Payroll

    A statistic researched, recorded and reported by the U.S. Bureau of Labor Statistics intended to represent the total number ...
  5. Conflict Theory

    A theory propounded by Karl Marx that claims society is in a state of perpetual conflict due to competition for limited resources. ...
  6. Inflation-Linked Savings Bonds (I Bonds)

    U.S. government-issued debt securities similar to regular savings bonds, except they offer an investor inflationary protection, ...
Trading Center