Traditional IRAs can be a smart solution to increase your tax-deferred retirement savings.
With a Traditional, Rollover, SEP, or SIMPLE IRA, you make contributions on a pre-tax basis (if your income is under a certain level and certain other qualifications) and pay no taxes until you withdraw money. IRA withdrawal rules and penalty details vary depending on your age.
Your deductible contributions and earnings (including dividends, interest, and capital gains) will be taxed as ordinary income. The U.S. government charges a 10% penalty on early withdrawals from a Traditional IRA, and a state tax penalty may also apply. You can learn more at IRS Publication 590-B.
Expand All Collapse All You may be able to avoid a penalty if your withdrawal is for:First-time home purchase
Some types of home purchases are eligible. Funds must be used within 120 days, and there is a pre-tax lifetime limit of $10,000.
Educational expenses
Some educational expenses for yourself and your immediate family are eligible.
Disability or death
If you're disabled, you can withdraw IRA funds without penalty. If you pass away, there are no withdrawal penalties for your beneficiaries.
Medical expenses
You can avoid an early withdrawal penalty if you use the funds to pay unreimbursed medical expenses that are more than 7.5% of your adjusted gross income (AGI).
Birth or adoption expenses
New parents can now withdraw up to $5,000 from a retirement account to pay for birth and/or adoption expenses penalty-free.
Health insurance
If you're unemployed for at least 12 weeks, you may withdraw funds to pay health insurance premiums for yourself, your spouse, or your dependents.
Periodic payments
You can avoid an early withdrawal penalty if you choose to receive your funds on a regular distribution schedule. 1
Involuntary IRA distribution
If an IRA distribution is the result of an IRS tax levy, IRS Form 5329 explains how to claim your penalty exception.
Reservist IRA distributions
Members of the National Guard and reservists can take penalty-free distributions if they are called to active duty for at least 180 days. Some restrictions apply.
Qualified disaster
IRA owners in a Federally Declared Disaster Area designated by the Federal Emergency Management Agency (FEMA) who have sustained an economic loss can withdraw up to $22,000 per disaster.
Domestic abuse
If you are a victim of domestic abuse, you may withdraw up to $10,000 (subject to cost-of-living adjustments starting in 2025) or 50% of your balance, whichever is less within one year of the abuse.
Emergency personal expenses
You may take a $1,000 withdrawal, once in a calendar year, for the purpose of an unforeseeable or immediate financial need. No additional emergency expense distributions are allowed during the following calendar year unless repayment occurs, or you make a Traditional or Roth IRA contribution in the amount equal to the distribution amount that has not been repaid.
