This material is for informational purposes only and Scottrade is not responsible for any errors or omissions.If you want to see your accountant fall off his chair, tell him you want to withdraw money early from your individual retirement account (IRA).No Penalty Exceptions: Simplified Employee Pension (SEP-IRA) The exceptions to the 10 percent IRS penalty rule are if the withdrawal was: 1.Death/Disability - Upon death or having developed a disability. Payment Plan - Part of "substantially equal payments" over your lifetime. Medical Expenses - For payment of non-reimbursed medical expenses exceeding 7.5 percent of your adjusted gross income. Medical Insurance - For payment of your medical insurance or your spouse and dependents medical insurance.The short answer to when you can withdraw funds from your IRA is – !
And, if you deducted your contributions to the account, you'll owe tax on the entire balance of the withdrawal. If you withdraw from your account before you reach 59 1/2, you'll likely incur a penalty of 10% of the amount of the withdrawal, in addition to the taxes you owe.In other words, the money grows without having to pay any taxes on the gains.Of course, with an IRA you have to pay the Piper at some point in time.The exceptions for which you avoid this penalty include using the withdrawal to pay for qualifying medical expenses, college tuition, and up to ,000 toward the purchase of a first home for yourself, your child, or your parents. To find your RMD, you divide your account balance at the end of the previous year, which is typically Dec.You must begin making annual withdrawals, known as required minimum distributions (RMDs), by April 1 of the year following the year in which you turn 70 1/2. 31, by a withdrawal factor based on your age using the IRS uniform life table.