Can I Take Money Out of My IRA Without Penalty?

You can take money out of an IRA without penalty before age 59½ if your withdrawal fits one of the exceptions Congress has written into the tax code. There are more than a dozen of them, covering medical costs, disability, higher education, a first home, the birth or adoption of a child, health insurance during unemployment, federally declared disasters, domestic abuse, small personal emergencies, military reservist call-ups, IRS levies, inherited accounts, and a structured payment plan called SEPP. Roth IRA contributions are a separate matter: you can pull the money you originally contributed out at any age, at any time, with no tax and no penalty. Everything below explains which door fits your situation, and one thing worth stating up front: avoiding the 10% penalty is not the same as avoiding income tax on the withdrawal.

Roth Contributions Come Out First, Always Free

If your money is in a Roth IRA, start here before considering any exception. Roth accounts follow an ordering rule: the dollars you originally contributed come out first, and because you already paid income tax on them, they are tax-free and penalty-free at any age with no waiting period.¹

Earnings are treated differently. To pull Roth earnings out completely tax-free and penalty-free, you must be at least 59½ and the account must have been open for at least five years, counted from the first day of the tax year for which you made your initial Roth contribution. Withdraw earnings before meeting both tests and they become taxable income and are exposed to the 10% penalty unless one of the exceptions below applies.

Medical, Disability, and Health Insurance Exceptions

Unreimbursed Medical Expenses

You can withdraw IRA funds penalty-free to pay medical expenses that exceed 7.5% of your adjusted gross income for the year.² Only the amount above that floor qualifies. If your AGI is $60,000, the first $4,500 of medical costs does not count, and only unreimbursed expenses above that line — costs your insurance did not cover — earn the exception.³

Total and Permanent Disability

If you become totally and permanently disabled, you can take IRA distributions penalty-free. The IRS considers you disabled when a physician certifies that your physical or mental condition prevents you from performing any substantial work and is expected to result in death or last indefinitely.⁴

Terminal Illness

Under the SECURE 2.0 Act, a physician’s certification that you have a condition reasonably expected to result in death within a set period lets you withdraw funds penalty-free starting on or after the date of that certification.² Unlike the disability exception, there is no requirement that the condition stop you from working.

Health Insurance Premiums While Unemployed

Lose your job, collect unemployment for at least 12 consecutive weeks, and you can withdraw IRA money penalty-free to pay health insurance premiums for yourself, your spouse, and your dependents. The withdrawal must occur during the same year you received unemployment compensation or the following year, and the exception ends once you have been re-employed for 60 days or more.²

First Home, Education, and New Children

First-Time Home Purchase

You can withdraw up to $10,000 over your lifetime from an IRA to buy, build, or rebuild a first home without paying the 10% penalty.² The home must be a principal residence for you, your spouse, a child, a grandchild, or a parent. “First-time homebuyer” does not literally mean never having owned before. It means neither you nor your spouse had an ownership interest in a principal residence during the two-year period before the purchase date.⁵

You must use the funds within 120 days of receiving the distribution. If the deal falls through or the deadline slips, you can roll the money back into an IRA within that same 120-day window to avoid both the penalty and the income tax.¹

Higher Education Expenses

Withdrawals used for qualified education expenses escape the 10% penalty. Qualifying costs include tuition, fees, books, supplies, and equipment required for enrollment at an eligible postsecondary institution. Room and board also qualify if the student is enrolled at least half-time.⁶ The student can be you, your spouse, your child, or your grandchild. The penalty-free amount is capped at the actual qualified expenses for the year, so keep tuition statements and receipts.

Birth or Adoption of a Child

Each parent can withdraw up to $5,000 from their own IRA within one year of a child’s birth or the finalization of an adoption, penalty-free.² The money can be used for any purpose related to the child. You may repay the distribution to an eligible retirement plan within three years of the withdrawal if you want to rebuild your savings. Adopting a spouse’s existing child does not qualify.

Emergency and Hardship Withdrawals Under SECURE 2.0

The SECURE 2.0 Act added three narrower hardship exceptions, most of them effective for distributions after December 31, 2023.

Emergency Personal Expenses

You can take one penalty-free distribution per calendar year for an unforeseeable or immediate personal or family emergency. The maximum is the lesser of $1,000 or your total IRA balance minus $1,000. You have three years to repay it, and you cannot take another emergency distribution during that repayment window unless you first repay the earlier one in full.⁷

Domestic Abuse Victims

Victims of domestic abuse by a spouse or domestic partner can withdraw the lesser of $10,000 (adjusted for inflation) or 50% of the IRA balance, penalty-free. The distribution must be taken within one year of the abuse.⁵ This exception is self-certified, so you do not have to submit proof to the plan administrator. You have three years to repay the amount to an eligible retirement plan.

Qualified Disaster Recovery

If your principal residence sits in a federally declared disaster area and you sustain an economic loss, you can withdraw up to $22,000 across all your retirement plans and IRAs without the 10% penalty. Income from the distribution can be spread over three tax years, and you have three years to repay all or part of the amount. A repayment inside that window is treated as a direct rollover, wiping out the income tax on the repaid portion.⁸

Substantially Equal Periodic Payments (SEPP)

If nothing on the list above fits, you can still avoid the penalty by setting up a series of substantially equal periodic payments, sometimes called a 72(t) plan. Under this method, you commit to annual distributions calculated using your life expectancy (or the joint life expectancies of you and a beneficiary) and an IRS-approved interest rate. The IRS recognizes three calculation methods.⁹

The trade-off is rigidity. Once payments begin, you must continue them for five full years or until you reach age 59½, whichever comes later. Stop early, change the amount, or take an extra withdrawal outside the schedule and the IRS retroactively applies the 10% penalty to every distribution you received under the plan, plus interest.¹⁰ SEPP fits people retiring early who need predictable income before 59½ and can commit to the schedule.

Other Narrow Exceptions

Inherited IRAs

Distributions from an IRA you inherited from someone who has passed away are not subject to the 10% penalty, regardless of your age. One boundary: if you inherit a traditional IRA from your spouse and elect to treat it as your own rather than as an inherited account, the standard age-based penalty rules apply to withdrawals before 59½.¹

IRS Levy

When the IRS seizes IRA funds through a levy to satisfy a tax debt, the amount taken is exempt from the 10% penalty.² Regular income tax still applies.

Qualified Reservist Distributions

Reservists called to active duty for at least 180 days can take penalty-free distributions during their active-duty period.⁴ Qualifying reservists may repay the amount to an IRA within two years after active duty ends.

Short-Term Cash: The 60-Day Rollover

If what you actually need is short-term cash rather than a permanent withdrawal, a 60-day rollover can function as an interest-free bridge. Take a distribution, redeposit the full amount into the same or another IRA within 60 days, and the transaction counts as a rollover instead of a taxable distribution. No penalty, no tax.¹¹

There is a hard limit: only one IRA-to-IRA rollover in any 12-month period, no matter how many IRA accounts you own. Trustee-to-trustee transfers and Roth conversions do not count against that limit. Miss the 60-day window and the entire amount becomes a taxable distribution, and the 10% penalty applies unless another exception saves you.

SIMPLE IRAs: Watch the First Two Years

A SIMPLE IRA carries an extra risk. Withdraw from a SIMPLE IRA within the first two years of participating in the plan while under 59½ and the penalty jumps from 10% to 25%. After the two-year window, the standard 10% penalty applies (unless an exception fits). The two-year clock starts from the date of your first contribution to the plan, not from the date you opened the account. Transferring a SIMPLE IRA balance to a non-SIMPLE IRA during that window also triggers the 25% penalty.¹²

Penalty-Free Is Not Tax-Free

Every exception described above removes the 10% additional tax. For a traditional IRA, you still owe ordinary federal income tax on the distribution, and it is added to your taxable income for the year.¹³ Most states tax traditional IRA distributions as regular income too, which further reduces the net amount you actually receive.

For a Roth IRA, contributions you already paid tax on come out tax-free. But if you withdraw earnings before meeting both the five-year and age-59½ tests, those earnings are taxed as ordinary income even when a penalty exception applies. Size your withdrawal with both federal and state income taxes in mind, not just the penalty.

How to Claim the Exception on Your Tax Return

Your IRA custodian will send a Form 1099-R after any distribution. Box 7 carries a distribution code that tells the IRS the basic nature of the withdrawal. Code 1 means an early distribution with no known exception; Code 3 signals disability.¹⁴ For most exceptions, including medical expenses, education, and first-home purchases, the custodian will use Code 1 because it does not know why you took the money.

When the 1099-R shows Code 1 but you qualify for an exception, you claim it by filing Form 5329 with your return and entering an exception reason number that matches your situation. Common IRA-specific codes include:

02: Substantially equal periodic payments
03: Total and permanent disability
05: Unreimbursed medical expenses above 7.5% of AGI
07: Health insurance premiums while unemployed
08: Qualified higher education expenses
09: First-time home purchase (up to $10,000)
11: Qualified reservist distribution

These codes appear in the Form 5329 instructions.⁴ Skip Form 5329 and the IRS assumes the 10% penalty applies, then bills you. Hold on to supporting documents — tuition bills, medical invoices, closing disclosures, physician statements, unemployment records — in case the IRS asks for proof.

1
Internal Revenue Service. Publication 590-B (2025), Distributions From Individual Retirement Arrangements (IRAs)
2
Internal Revenue Service. Retirement Topics – Exceptions to Tax on Early Distributions
3
Internal Revenue Service. Publication 502 (2025), Medical and Dental Expenses
4
Internal Revenue Service. 2025 Instructions for Form 5329 – Additional Taxes on Qualified Plans (Including IRAs) and Other Tax-Favored Accounts
5
Office of the Law Revision Counsel. 26 USC 72 – Annuities; Certain Proceeds of Endowment and Life Insurance Contracts
6
Internal Revenue Service. Publication 970 (2025), Tax Benefits for Education – Section: 8. Education Exception to Additional Tax on Early IRA Distributions
7
Internal Revenue Service. Notice 2024-55 – Certain Exceptions to the 10 Percent Additional Tax
8
Internal Revenue Service. Disaster Relief Frequently Asked Questions – Retirement Plans and IRAs Under the SECURE 2.0 Act of 2022
9
Internal Revenue Service. Notice 2022-6 – Determination of Substantially Equal Periodic Payments
10
Internal Revenue Service. Substantially Equal Periodic Payments
11
Internal Revenue Service. Rollovers of Retirement Plan and IRA Distributions
12
Internal Revenue Service. SIMPLE IRA Withdrawal and Transfer Rules
13
Internal Revenue Service. IRA FAQs – Distributions (Withdrawals)
14
Internal Revenue Service. Instructions for Forms 1099-R and 5498 (2025)