IRA Withdrawal Rules

Withdrawal rules vary, depending on whether you have a traditional or Roth IRA and, generally, your age. While you must be 59½ to withdraw funds from a traditional IRA without penalty, there are some exceptions to that rule in certain qualifying circumstances. Keep in mind that you can take money out of your IRA at any time if you’re willing to pay the associated taxes, fees, and penalties.

IRA Withdrawal Age

You are eligible to make withdrawals without penalties or fees from a traditional IRA at age 59½, but you can also wait until you are older. For traditional IRAs you must begin taking withdrawals, or Required Minimum Distributions (RMDs), starting at age 73*, (or 72 if you were born before July 1, 1949).

The rules for making withdrawals from a Roth IRA are more nuanced, though generally you must be age 59½ and have held the account for five years. There is no required age to begin taking disbursements from a Roth IRA.

When Can I Withdraw Assets?

You can withdraw assets from an IRA at any age and time, but if you withdraw from a traditional IRA before the age of 59½, you may be liable for taxes, fees, and penalties.

Early IRA Withdrawals

Traditional IRA

When you withdraw from a traditional IRA before age 59½, you’ll pay a 10% federal penalty tax as well as tax on the withdrawal amount. The entire amount is usually taxable. However, you will not pay penalties if you need funds for one of the following:

  • Unreimbursed medical expenses (must be more than 10% of your adjusted gross income)
  • Health insurance premiums while unemployed (must have received unemployment compensation for 12 consecutive weeks)
  • Permanent disability and inability to work
  • Higher education expenses for you, your spouse, children or a beneficiary
  • Inheriting an IRA, you’re not subject to withdrawal penalties – unless you’re the spouse and roll the funds over to your own IRA, (in which case the early withdrawal rules apply)
  • Buying, building, or rebuilding your own home for the first time (“first time” meaning you have not owned a home in the previous two years)
  • Substantially Equal Periodic Payments (SEPP) or regularly withdrawn amounts over a period of five years, by pre-approved methods determined by the IRS
  • To pay an IRS levy on back taxes (no penalty on the IRA withdrawal if the IRS takes the money directly from your account)
  • Qualified reservist distributions for military reservists or National Guard members

In general, an early traditional IRA withdrawal amount will be included in your gross income tax as taxable income for the year. The withdrawals are not taxed as income in certain cases, such as if you need funds to pay medical insurance premiums, because of loss, or some other type of qualifying hardship distribution because of "immediate and heavy financial need."

IRA Hardship Withdrawals

If you take an IRA hardship withdrawal, you can only withdraw the exact amount needed to meet the hardship.

The types of hardships that qualify you for early withdrawal include:

  • Medical care expenses for you, your spouse, dependents, or beneficiary
  • Costs directly related to the purchase of your primary residence (excluding mortgage payments)
  • Tuition or related educational fees and room and board expenses for the next 12 months of postsecondary education for your or your spouse, children, dependents, or beneficiary
  • Payments necessary to prevent eviction from your principal residence or foreclosure on the mortgage on that residence
  • Funeral expenses for you, your spouse, children, dependents, or beneficiary
  • Certain expenses to repair damage to your primary residence

Read more about hardship distributions on the IRS website.

Roth IRA Early Withdrawal

You can withdraw what you have contributed to your Roth IRA—that is, your after-tax contributions, or what’s known as “basis”—at any time without paying taxes or penalties. If you wish to withdraw your earnings from a Roth IRA without paying taxes, you must be 59½ and must have held the Roth IRA for at least five years. Exceptions to these requirements include:

  • Becoming disabled and needing the funds to live on
  • Needing Roth funds of up to $10,000 to buy your first home
  • Distributions being made to your heirs upon your death

When Must I Withdraw Assets?

Mandatory RMDs from a traditional IRA start in April of the year following the year you reach age 73* (or 72 if born before July 1, 1949). RMDs are calculated based on your life expectancy and the end balance in your account the prior year.

There are no withdrawal requirements for a Roth IRA. The funds may continue to grow tax-free in the account and can be left to your heirs if you wish. Upon inheritance, your heirs will have withdrawal requirements.

IRA Withdrawal Taxes

Taxes on withdrawals are entirely dependent on what type of account you have and when you decide to withdraw the money. In general, with Roth accounts you will have already paid taxes before you contribute money to your account so you can withdraw money tax-free as long as you meet the 59½-year age requirement and you have held the account for five years.

Since you contributed to a traditional IRA with pre-tax dollars, you can expect to pay taxes on withdrawals. The amount you invested as well as the account earnings will be included in your taxable income for the year.

When you reach of age, you must begin making RMDs from a traditional IRA. Otherwise, you’ll pay a 50% tax on the amount of the distribution you’re supposed to take.

How Will I Receive Distributions?

For RMDs from a traditional IRA, some people like to set up automatic withdrawals into a separate bank account. This helps avoid any potential consequences of forgetting to take distributions.

You can also call the institution that holds your IRA and request a withdrawal via check or whatever method you prefer. Keep in mind that it may take five to seven business days to process your request.

Qualified Charitable Distributions (QCD)

If you are age 70½ or older, you are eligible to make a qualified charitable distribution from your IRA. This is a contribution that goes directly from your IRA to a qualified charity. You pay no taxes on the amount of the charitable distribution and it qualifies as a Required Minimum Distribution. So, if you have an RMD of $10,000 per year and you make a charitable distribution of $5,000, you only have to take out $5,000 more to satisfy your RMD for the year. If your charitable distribution is for the full $10,000, you are not required to withdraw anything else for the year.


Talk to MissionSquare Retirement at (800) 669-7400.

* Age 70½ (if you were born before July 1, 1949), age 72 (if you were born after June 30, 1949, and before January 1, 1951), or age 73 (if you were born after December 31, 1950).

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