When Are IRA Distributions Allowed?Normal distributions from your IRA are allowed after you reach age 59½. At this age, you may begin making voluntary withdrawals. Once you have reached the age of 70½, however, you are required by law to take distributions. There are IRS formulas that will help you determine how much you must withdraw after age 70½.
If you take a premature withdrawal before 59½, you will be charged a 10 percent penalty tax on top of the regular income taxes you'll owe on the withdrawn amount. However, you can withdraw without penalty under any of these exceptions:
- You become disabled.
- You die, in which case the money in the IRA is paid to your beneficiary.
- You incur certain medical expenses. They must exceed 7.5 percent of your adjusted gross income and cannot be covered by insurance.
- You pay health insurance premiums while unemployed. There are certain conditions you must meet to qualify for this exception.
- You need the money to pay certain college expenses.
- Your withdrawals are made as part of a series of equal annual withdrawals based upon your life expectancy.
- Your withdrawals are made for first-time homebuyer expenses.
Although the rules can be complicated, knowing your withdrawal options will make withdrawing your IRA money a much easier and more cost-effective way to retire.