Understanding Penalty-Free IRA Withdrawals: Key Exceptions and Updates

Authored by Vasquez + Company

Authored by Vasquez + Company

Withdrawing funds from an Individual Retirement Account (IRA) before age 59½ typically incurs a 10% tax penalty. However, there are specific circumstances under which individuals can access these funds penalty-free. This article outlines the various situations where early withdrawals are exempt from this penalty, such as disability, first-time home purchases, and higher education expenses. It also covers important updates from the SECURE 2.0 Act regarding required minimum distributions (RMDs).

Key Points

  • Penalty-Free Withdrawals: Situations include death, disability, equal periodic payments, home purchases, unreimbursed medical expenses, medical insurance, higher education expenses, IRS levy, and active duty call-up.
  • Required Minimum Distributions: Updates from the SECURE 2.0 Act, including changes in the required distribution age from 72 to 73, and later to 75.

For more information, read the full article here.