IRAs

What if I have to take money out of my IRA before retirement?

The government wants to discourage you from raiding your IRA until you’re retired. (It’s a retirement account, after all.)

If you withdraw money from a traditional IRA before you turn 59 ½, you must pay a 10% tax penalty (with a few exceptions). That’s on top of paying regular income taxes on that cash. The same 10% penalty applies if you withdraw investment earnings from a Roth IRA before 59 ½.

The exceptions involve cases in which you use the withdrawal to pay for college expenses, to buy your first home (up to $10,000) or for medical expenses greater than 7.5% of your AGI (adjusted gross income), or in case of disability.

Your browser, Internet Explorer 8 or below, is out of date. It has known security flaws and may not display all features of this and other websites.

Learn how to update your browser
Follow

Get every new post delivered to your Inbox.

Join 46,434 other followers