Traditional IRA Withdrawals & Distributions.

Typically, when a taxpayer withdraws money from a Traditional IRA account before the age of 59 ½ they are required to pay an additional 10% tax on the distribution in addition to paying taxes on regular income tax on that amount. There are, however, exceptions to this rule:

1. You have unreimbursed medical expenses that are more than 7.5% of your adjusted gross income.
2. The distributions are not more than the cost of your medical insurance.
3. You are disabled.
4. You are the beneficiary of a deceased IRA owner.
5. You are receiving distributions in the form of an annuity.
6. The distributions are not more than your qualified higher education expenses.
7. You use the distributions to buy, build, or rebuild a first home.
8. The distribution is due to an IRS levy of the qualified plan.
9. The distribution is a qualified reservist distribution. **

Withdrawing money from a Traditional IRA before the age of 59 ½ under any circumstances other than these will create a tax burden. Should you find yourself in these circumstances make sure contact a competent tax consultant.


** Source: http://www.irs.gov/publications/p590/ch01.html