Exceptions to the 10% IRA Early-Withdrawal Penalty

An illustration of a person pulling money out of a box marked IRA, representing: Exceptions to the IRS Early Withdrawal Penalty

The Balance / Theresa Chiechi

You may have to take money out of your traditional IRA earlier than you'd planned. This type of withdrawal will be taxed. It can also be subject to an early-withdrawal penalty. There are some early-withdrawal exceptions. Certain situations might qualify you for an exception to the IRA penalty tax on withdrawals taken before you reach age 59 1/2.

How To Avoid the Early-Withdrawal Penalty

Certain uses exempt you from an IRA early-withdrawal penalty. There are no exceptions, however, to paying income tax on the amounts withdrawn under any of these conditions.

Paying for Medical Costs

You might qualify for an exemption from the IRA penalty tax if you use your IRA early withdrawal to pay for medical costs that are more than 7.5% of your adjusted gross income.

Paying for Health Insurance

You might be exempt from an early-withdrawal penalty if you're unemployed, you used the IRA early withdrawal to pay your medical insurance premiums, and you meet three additional requirements:

  • You received unemployment compensation paid under federal or state law for 12 straight weeks because you lost your job.
  • You took the IRA withdrawal in the year you received unemployment or the next year.
  • You took your IRA withdrawal within 60 days of your new employment starting—if you've since become re-employed.


Get a doctor's statement to qualify for an exception to the penalty tax if you're disabled. The IRS considers you to be disabled if you can't perform any substantial gainful activity due to a mental or physical condition. A physician must attest that your condition is likely to be prolonged, or even to result in death.

Inheriting an IRA

You can inherit an IRA in a few ways, and the tax penalty depends on how the transaction occurred.

You won't have to pay the penalty on amounts withdrawn if you inherit from a non-spouse, even if the IRA owner was under age 59 1/2. You must, however, include any IRA withdrawals in your adjusted gross income (AGI).

Any IRA early withdrawal you take will be subject to the 10% penalty tax if you inherit the account from a spouse and you choose to treat it as your own IRA.

You would be eligible to receive IRA early withdrawals without paying the 10% penalty tax if you inherit an IRA from a spouse, but you choose to title the IRA as an "inherited IRA."

72(t) Payments

Internal Revenue Code Section 72(t), the Substantially Equal Periodic Payment (SEPP) rule, lets you withdraw money from your retirement account at any age without penalty. You can withdraw a set amount of 72(t) payments each year based on your life expectancy. You must follow certain rules and use one of three approved methods to calculate an ongoing withdrawal amount.

You must stick with your withdrawal schedule for a minimum of five years or until you reach age 59½, whichever event occurs later. If you don't, all amounts withdrawn can be subject to the penalty tax.

Qualified Higher-Education Expenses

IRA early withdrawals that are used to pay for qualified higher-education expenses on behalf of you, your spouse, or the children or grandchildren of you or your spouse are exempt from the 10% tax penalty. The funds can be used for room and board if the student is enrolled at least half time, as well as tuition, fees, books, supplies, equipment, and special-needs services.

First-Time Home Purchase

Up to $10,000 of an IRA early withdrawal that's used to buy, build, or rebuild a first home for a parent, grandparent, yourself, a spouse, or you or your spouse's child or grandchild can be exempt from the 10% penalty. You must meet the IRS definition of a first-time homebuyer.


A first-time homebuyer is someone who hasn't had an ownership interest in a home in the last two years before buying a new home.

You and your spouse can each withdraw $10,000 from your IRAs without paying the 10% penalty if you both qualify as first-time homebuyers. The distribution must be used to pay for qualified purchase and closing costs within 120 days after you receive the money.

Qualified Reservist Distributions

A qualified reservist distribution isn't subject to the penalty tax on IRA early withdrawals. According to the IRS, a qualified reservist distribution must meet the following requirements:

  • You were ordered or called to active duty after September 11, 2001.
  • You were ordered or called to active duty for a period of more than 179 days or for an indefinite period because you're a reserve member.
  • The distribution is taken from an IRA or from amounts attributable to elective deferrals under a section 401(k) or 403(b) plan or a similar arrangement.
  • The distribution was made no earlier than the date of the order or call to active duty, and no later than the close of the active-duty period.

Frequently Asked Questions (FAQs)

If you don't qualify for any of the exceptions, at what age can you withdraw from your IRA without penalty?

If you do not qualify for any of the exceptions, at age 59 1/2, you can withdraw from your IRA without the 10% penalty tax.

What is the IRA 5-year rule?

The 5-year rule applies to Roth IRAs. After opening the account, you must wait five years before withdrawing from it if you want to avoid penalties and taxes.

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The Balance uses only high-quality sources, including peer-reviewed studies, to support the facts within our articles. Read our editorial process to learn more about how we fact-check and keep our content accurate, reliable, and trustworthy.
  1. IRS. "Publication 590-B (2019): Distributions From Individual Retirement Arrangements (IRAs)." Pages 22-24.

  2. IRS. "Publication 590-B (2019): Distributions From Individual Retirement Arrangements (IRAs)." Pages 5, 23.

  3. IRS. "Retirement Plans FAQs Regarding Substantially Equal Periodic Payments."

  4. IRS. "What If I Withdraw Money From My IRA?"

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