In some specific situations, you may be able
to take early withdrawals from a traditional
IRA
without owing
the 10% penalty. For example, you can use an unlimited amount
of IRA money to pay college tuition or medical expenses. And you
can withdraw up to $10,000 to buy a first home for yourself, your
parents, or your child. You will still owe the federal income
tax that applies to the withdrawal amount, however, which will
reduce the total you have available for those expenses.
With a
Roth IRA,
you can always withdraw
your contributions without tax or penalty before you turn 59 1/2
since you’ve already paid tax on them. And you can withdraw
up to $10,000 without penalty if you use it to purchase a first
home. However, you can’t make penalty- or tax-free withdrawals
for tuition or medical expenses.
Since these rules can be complicated, you’ll
want to consult your financial or tax adviser before making any
withdrawal decisions.
