IRA Rules
Individual Retirement Account Rules

IRA Rules And Information

 
IRA Withdrawal Penalty Exceptions 


Normally if you withdraw money from an IRA or other "Qualified" account before the age of 59 1/2 there is a 10% IRA early withdrawal penalty in addition to paying regular income taxes on the distribution. There are however at least 7 exceptions that can be made as long as the money has been in the account for at least 5 years. You may still have to pay income tax on the money you withdraw but you won't have to pay a penalty.


 

The Exceptions are:


1. If you are the owner of the IRA and are paralyzed permanently then you can take IRA distributions penalty free.

2. If you have medical fees that were not covered and equal more than 7.5% of your adjusted gross income.

3. If you as the owner die before 59 1/2 then your estate will not have to pay any penalties.

4. If you are a first time home buyer you can use up to $10,000 for the home purchase with no penalty.

5. Certain costs for higher education may be paid penalty free but normal income taxes would apply.

6. You can pay for medical insurance coverage with IRA funds if you have been unemployed more than 12 weeks..

7. If the Internal Revenue Service places a Tax Lein on your IRA account, you won't be penalized on the funds..

 
 


Always consult with your accountant or tax professional before making any decisions that affect your taxes.

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