You can withdraw any contributions you have made to your Roth IRA at any time, without paying taxes or penalties. However, you may have to pay taxes and penalties on your Roth IRA earnings. Traditional and Roth IRA distributions can carry a 10% penalty if you accept them too soon, but there are exceptions to early withdrawals that allow you to skip the fine. Be sure to check the most recent tables when calculating your RMD, which can be found here under Calculating and taking your RMD, or check out the updated single life expectancy table for RMDs inherited from an IRA.
You can also withdraw money from a traditional IRA and avoid paying the 10% penalty if you transfer the money to another qualified retirement account (such as a Roth IRA) within 60 days. If you adopt (or give birth) to a child, you can withdraw funds from your IRA if it's within the first year after the adoption ended (or the baby's date of birth). If you don't have health insurance or have out-of-pocket medical expenses that aren't covered by insurance, you may be able to request penalty-free distributions from your IRA to cover these expenses. Here are nine cases where you can withdraw money early from a traditional or Roth IRA without being penalized.
However, as much as you want your IRAs to remain intact until retirement, unforeseen expenses may force you to withdraw some of those assets early. When you turn 59 and a half years old, you'll be able to withdraw funds from your traditional IRA without restrictions or penalties. If you need to make regular withdrawals from your IRA for a few years, the IRS allows you to do so without penalty if you meet certain requirements. If you become permanently disabled and can no longer work, the IRS allows you to withdraw money from your IRA without paying the 10% penalty.
In addition, if you deposit money into your IRA but then decide that you need it back, you can usually withdraw a contribution made to a traditional IRA tax-free, as long as you do so before that year's tax filing deadline and don't deduct the contribution from your taxes. The Internal Revenue Service (IRS) imposes a 10% penalty on early IRA withdrawals to encourage you to keep your retirement savings intact. Whether you're retired or haven't retired yet and need extra money, understanding the IRS rules for withdrawing funds can help you make smart decisions about how to withdraw funds from your IRA. Your IRA provider must declare the amount you withdraw as a death distribution and include the code “4” in box seven of the IRS Form 1099-R, the form used to declare the distribution.
If you're looking for a tax-advantaged way to save for retirement, a traditional IRA may be right for you.