Traditional IRA Withdrawal Rules
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Tax-deferred accounts such as traditional IRAs come with a caveat: strict IRA distribution rules, both before and after retirement.
When can you withdraw from an IRA?
At age 59 ½, you can take penalty-free withdrawals from your IRA. You will still owe regular income taxes on withdrawals. If you qualify for certain exceptions, you could make withdrawals before that age and avoid paying a penalty (but not taxes). You are required to start making withdrawals at age 73.
» Withdrawing from a Roth IRA? Follow these Roth IRA withdrawal rules instead.
What is the IRA early withdrawal penalty?
The penalty for withdrawing from your traditional IRA before age 59 ½ is 10% of the amount withdrawn. That penalty comes on top of taxes. Your withdrawal will also be included as taxable income when you file your federal tax return. Exceptions exist, and they are detailed below.
Traditional IRA distribution rules
The main rule of withdrawing from a traditional IRA is that your distribution will be taxed as ordinary income. That’s because contributions were made with pre-tax income. The other rules for making a traditional IRA withdrawal depend on your age and, in some cases, what the withdrawal is for.
Click below to learn more about the different IRA distribution rules by age.
Under age 59 ½
If withdrawing from a traditional IRA before age 59 ½, this is considered an early withdrawal. On top of ordinary income tax, you can also expect to pay a 10% penalty. However, there are certain exceptions to the 10% early withdrawal penalty.
Birth or adoption of a child: In the year following the birth or adoption of your child, you can withdraw up to $5,000 without penalty. If married, each spouse can withdraw up to $5,000 from their own IRAs. The money can also be repaid without counting toward the annual contribution limit for the year.
Death or total and permanent disability: If you become disabled, IRA distribution rules say you can tap traditional IRA funds without penalty. If you die, your account beneficiary or estate will be able to do so.
Disaster relief: Victims of federally declared disasters can make a withdrawal of up to $22,000 if they meet IRS qualifications.
Domestic abuse survival: People who have survived domestic abuse from a partner or spouse can take an IRA distribution of 50% of the account holdings or $10,000, whichever is less.
Emergency distribution: Account holders can make one withdrawal per year for a qualifying emergency, up to $1,000.
Home purchase: You can use up to $10,000 from your traditional IRA toward the purchase of your first home — and if you’re purchasing with a spouse, that goes for each of you. The IRS’ definition of first home is pretty loose: You’re considered a first-time homebuyer under this rule if you or your spouse hasn’t owned a principal residence in the last two years. You must use the money within 120 days of the distribution, so time your withdrawal carefully. This exception could also be used to purchase the first home for your or a spouse’s child, grandchild, parent or certain other relatives.
Medical expenses and health insurance premiums: You’re allowed an IRA distribution to pay for unreimbursed medical expenses that exceed 7.5% of your adjusted gross income. For example, if you make $100,000 and have $15,000 in unreimbursed medical costs, you can use IRA assets to pay for $7,500 of it. You're also allowed to make IRA withdrawals to pay for health insurance premiums for you, your spouse or children when you are unemployed.
Qualified higher education expenses: IRA withdrawal rules allow you to use traditional IRA money to pay for higher education expenses not only for yourself but also for immediate family members. Expenses that fall under this rule include tuition, fees, books and supplies.
Qualified reservist distributions: If you’re in the military and you are called to active duty for more than 179 days, you can take a penalty-free distribution from your IRA. The withdrawal must be made during the period of active duty; in other words, you can’t take it earlier than the date of the call to serve, or later than the close of the active-duty period.
Rollovers: If you want to transfer money from one IRA to another IRA or other qualified retirement plan, you have 60 days to deposit the money without paying the 10% penalty.
Substantially equal payments: You don’t have to pay the 10% penalty if you start a series of distributions from your IRA that are spread equally over your life expectancy. The fine print: If you turn this fire hose on, you can’t turn it back off — you must take at least one distribution each year, and you can’t modify the schedule of payments until five years have passed or you’ve reached age 59 ½, whichever is later.The amount of the distributions must be based on an IRS-approved calculation that involves your life expectancy, your account balance and interest rates .
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Age 59 ½ and over
After reaching age 59 ½, individuals can make withdrawals from their traditional IRA for any reason. Withdrawals can be made without penalty, but any interest, dividends, and gains earned will still be taxed as ordinary income.
Age 73 and over
Once you reach 73 years of age, the IRS requires you to make an annual withdrawal, known as a required minimum distribution (RMD), from your retirement account. (However, note that if you turned 72 in 2023, you must take your first RMD by April 1, 2025.) In 2033, the age to begin taking RMDs will rise to 75.
These distributions are required because the money in your account grew tax-free, and the IRS will only let you defer taxes for so long. RMDs are taxed as ordinary income, and you can withdraw more than the required amount if you choose. The amount of the RMD is calculated by dividing your account balance by a life expectancy factor published by the IRS.
If you don't take these distributions, or if you don't withdraw enough, you may be subject to a 25% tax on the money you didn't withdraw. If you correct your RMDs within two years, you may be able to get the tax lowered to 10%. For amounts and RMD tables, see our full guide on required minimum distributions.
If you’re between 59 ½ and your RMD age, you’re in that sweet spot when you can do what you want — you don’t have to take distributions from the account, and leaving that money invested can allow it to continue to grow tax-deferred. If you do want to begin distributions, you can. You’ll pay taxes, but no penalty.
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