If I withdraw money early from my IRA account what expenses are waived from the penalties?

Answer 1

There are several exceptions to the age 59½ rule. Even if you receive a distribution before you are age 59½, you may not have to pay the 10% additional tax if you are in one of the following situations.

You have unreimbursed medical expenses that are more than 7.5% of your adjusted gross income.

The distributions are not more than the cost of your medical insurance.

You are disabled.

You are the beneficiary of a deceased IRA owner.

You are receiving distributions in the form of an annuity.

The distributions are not more than your qualified higher education expenses.

You use the distributions to buy, build, or rebuild a first home.

The distribution is due to an IRS levy of the qualified plan.

http://www.irs.gov/publications/p590/ch01.html#d0e7978

Answer 2

If you take an early distribution from an IRA, the full amount of the distribution is ALWAYS taxed as ordinary income.

The 10% penalty tax can be waived if you are totally and permanently disabled OR if the distribution was used to pay medical bills that exceeded 7.5% of your AGI. You do NOT need to itemize those medical bills, but the 7.5% AGI limit does apply. In virtually all other cases, the full amount of the early distribution is subject to the 10% penalty tax for early distributions.

There are no fees or expenses that are "waived" from the taxes. The gross amount of the distribution is fully taxable.

Answer 3

I don't exactly understand your question, but if you are asking what are the exceptions for the 10% penalty which is assessed on top of your tax, They are few: purchase of your first home, over 7.5% of your income in med. expenses, you've reached 59.5. There are a couple of more. The best thing to do is to roll-over your IRA without touching it, then you have no penalty or tax.

good luck & bless
www.irs.gov, individual, publication 17 see index -

Answer 4

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