Traditional IRA withdrawal rules come down to three thresholds and a stack of exceptions. Money you take out is taxed as ordinary income at whatever bracket you’re in that year. Take it before age 59½ and the IRS adds a 10% penalty on top unless your situation fits one of the carved-out exceptions. Reach the age set by your birth year (73 or 75 under SECURE 2.0) and withdrawals stop being optional. Everything else is detail around those three points.
Withdrawals After Age 59½
Once you hit 59½, the 10% early withdrawal penalty is gone. You can pull any amount for any reason, and the only cost is ordinary income tax at your current bracket.1Internal Revenue Service. Retirement Plans FAQs Regarding IRAs Distributions (Withdrawals) There’s no hardship test and no restriction on what you spend it on.
Being allowed to withdraw is not the same as it being a good idea. Every dollar out stops compounding, and a large distribution pushes up your taxable income for the year, which can raise Medicare premiums and increase how much of your Social Security is taxable. Spacing withdrawals across multiple tax years usually beats taking one big lump sum.
The 10% Early Withdrawal Penalty
Pulling money out before 59½ costs you a 10% additional tax on top of the regular income tax.2Office of the Law Revision Counsel. 26 USC 72 – Annuities; Certain Proceeds of Endowment and Life Insurance Contracts Someone in the 22% federal bracket effectively loses 32% of the withdrawal before any state tax applies. At least one state adds its own early withdrawal penalty, and most states with an income tax will treat the distribution as taxable regardless.
Your custodian reports the distribution to the IRS on Form 1099-R.3Internal Revenue Service. Instructions for Forms 1099-R and 5498 You report it on your Form 1040 for the year received, and if the penalty applies, you file Form 5329 as well.1Internal Revenue Service. Retirement Plans FAQs Regarding IRAs Distributions (Withdrawals)
Exceptions That Waive the Penalty
The tax code lists situations where the 10% penalty is waived even when you’re under 59½. The withdrawal is still taxed as ordinary income; you just skip the extra 10%.
Long-Standing Exceptions
- Total and permanent disability, when a physician certifies you can’t engage in substantial gainful activity.4Internal Revenue Service. Retirement Topics – Exceptions to Tax on Early Distributions
- Unreimbursed medical expenses that exceed 7.5% of your adjusted gross income for the year.
- Higher education expenses (tuition, fees, books, required supplies) at eligible post-secondary institutions, for you, your spouse, your children, or your grandchildren.
- First-time home purchase, up to a $10,000 lifetime cap. The IRS treats “first-time” as not having owned a home in the past two years.5Internal Revenue Service. Topic No. 557, Additional Tax on Early Distributions From Traditional and Roth IRAs
- Birth or adoption, up to $5,000 per child within one year of the birth or finalized legal adoption. Adopted children must be under 18 or physically or mentally unable to support themselves.
- Distributions taken to satisfy an IRS levy on the IRA itself.
Newer Exceptions Under SECURE 2.0
Terminal illness. If a physician certifies you’re expected to die within 84 months, any amount can be withdrawn penalty-free, and you may repay the distribution to an IRA within three years as a rollover.
Domestic abuse. Victims can withdraw the lesser of $10,000 (adjusted for inflation) or 50% of the vested account balance. The distribution must occur within one year of the abuse and can be repaid within three years.6Internal Revenue Service. Notice 2024-55: Certain Exceptions to the 10 Percent Additional Tax Under Code Section 72(t)
Emergency personal expenses. One penalty-free distribution of up to $1,000 per calendar year is available for unforeseeable or immediate financial needs, including medical costs, funeral expenses, car repairs, or imminent eviction. Another emergency distribution within the following three calendar years is restricted unless you repay the prior one or make new contributions at least equal to the withdrawn amount.
Substantially Equal Periodic Payments
If no standard exception fits and you still need regular pre-59½ access, a 72(t) plan is the escape valve. You commit to substantially equal periodic payments based on your life expectancy, and the 10% penalty is waived on the entire stream.7Internal Revenue Service. Substantially Equal Periodic Payments The IRS permits three calculation methods: required minimum distribution, fixed amortization, and fixed annuitization. The permitted interest rate for the fixed methods cannot exceed the greater of 5% or 120% of the federal mid-term rate for the two months before payments begin.
The catch is duration. Payments must continue until the later of five years from the first payment or the date you turn 59½. Start at 50 and you’re locked in for roughly a decade. Taking more than scheduled, skipping a payment, or otherwise modifying the plan triggers a retroactive 10% penalty on every distribution taken since the plan began, plus interest. The only permitted change is a one-time switch from a fixed method to the RMD method.
Required Minimum Distributions
The tax deferral doesn’t last forever. Federal law forces you to start drawing down the account at a set age so the government eventually collects the deferred tax.8Office of the Law Revision Counsel. 26 USC 401 – Qualified Pension, Profit-Sharing, and Stock Bonus Plans SECURE 2.0 set the starting age by birth year:
- Born 1951–1959: RMDs begin at age 73.9Internal Revenue Service. Retirement Plan and IRA Required Minimum Distributions FAQs
- Born 1960 or later: RMDs begin at age 75.10Congress.gov. Required Minimum Distribution (RMD) Rules for Original Owners
Missing an RMD or taking less than required triggers a 25% excise tax on the shortfall. Catch and correct the mistake within two years and the penalty drops to 10%.
How the Amount Is Calculated
Your RMD for a given year equals your account balance on December 31 of the prior year divided by a life expectancy factor from the IRS Uniform Lifetime Table.11Internal Revenue Service. Retirement Topics – Required Minimum Distributions (RMDs) The divisor shrinks with age, so the withdrawal percentage grows. At 73, the factor is roughly 26.5, which works out to about 3.8% of the account. By 85, the factor drops to around 16.0, pushing withdrawals near 6.3%.
Own more than one traditional IRA? Calculate the RMD for each account separately, then take the combined total from whichever IRA you want. That flexibility lets you draw from the account with the worst-performing investments or highest fees. The aggregation rule is IRA-only. RMDs from 401(k)s or 457(b) plans must come from each plan individually.
The First-Year Deadline
Your very first RMD comes with a one-time extension: you can delay it until April 1 of the year after you reach the applicable age. The trap is that your second RMD is still due by December 31 of that same year, so delaying stacks two taxable distributions into one calendar year and can bump you into a higher bracket. Most people are better off taking the first RMD in the year they actually hit the required age.
Qualified Charitable Distributions
If you’re 70½ or older and give to charity, a qualified charitable distribution transfers money directly from your IRA to an eligible charity without the distribution counting as taxable income.12Office of the Law Revision Counsel. 26 USC 408 – Individual Retirement Accounts The annual limit was $108,000 per person for 2025 and adjusts with inflation.13Internal Revenue Service. Publication 526 (2025), Charitable Contributions QCDs also count toward satisfying your RMD for the year, making them one of the few tools that reduce the tax hit from mandatory withdrawals.
The transfer must move directly from the IRA custodian to the charity. If the money touches your bank account first, it becomes a regular taxable distribution. Most public charities qualify, but donor-advised funds and private foundations don’t.
The 60-Day Rollover Rule
Take a distribution and change your mind? You have 60 days from the date you receive the funds to put the money back into a retirement account and avoid taxation.14Internal Revenue Service. Rollovers of Retirement Plan and IRA Distributions Miss the deadline and the entire amount is a taxable distribution, plus the 10% penalty if you’re under 59½.
Only one IRA-to-IRA rollover is allowed in any 12-month period, and the limit covers all your IRAs combined, including SEP and SIMPLE IRAs. Direct trustee-to-trustee transfers don’t count against that limit because the money never passes through your hands. When moving IRA assets between custodians, a direct transfer is almost always safer.
Watch the withholding. IRA custodians withhold 10% for federal tax by default on a distribution check, though you can elect out. Employer plan distributions face a mandatory 20% you cannot waive. Either way, if you’re doing a 60-day rollover, you must deposit the full pre-withholding amount into the new account. The withheld portion comes back as a refund when you file, but you have to front that money yourself in the meantime.
The Pro-Rata Rule for After-Tax Contributions
If you ever made nondeductible (after-tax) contributions to a traditional IRA, you cannot just pull those dollars out tax-free. The IRS treats all of your traditional IRAs as one pool and taxes each distribution proportionally based on how much is pre-tax versus after-tax.15Internal Revenue Service. 2025 Instructions for Form 8606
Say your combined traditional IRAs hold $200,000 and $40,000 of that came from nondeductible contributions. Then 20% of any distribution is tax-free and 80% is taxable. You calculate this on Form 8606, which you must file for any year you take a distribution from an IRA with basis. Skip the form and the IRS has no record of your after-tax contributions and may tax the whole distribution. Keep records of every nondeductible contribution, going back as far as needed.
Inherited IRAs Follow Different Rules
Inheriting a traditional IRA is a separate rulebook. A surviving spouse can roll the account into their own IRA. Most other beneficiaries who inherited from someone who died in 2020 or later must empty the account by the end of the tenth year after the year of death, and whether annual distributions are required during that window depends on whether the original owner had reached their required beginning date.16Internal Revenue Service. Retirement Topics – Beneficiary Eligible designated beneficiaries (minor children of the deceased, disabled or chronically ill individuals, and anyone no more than 10 years younger than the original owner) can stretch distributions over their own life expectancy.17Internal Revenue Service. Publication 590-B (2025), Distributions From Individual Retirement Arrangements (IRAs) If you’re a beneficiary, don’t assume the rules covered above apply to you; they don’t.
Withholding and Reporting
When you request a distribution, your custodian asks you to complete Form W-4R to set your federal withholding.18Internal Revenue Service. Form W-4R – Withholding Certificate for Nonperiodic Payments and Eligible Rollover Distributions The default is 10% for nonperiodic payments. You can pick a higher rate but cannot go lower unless you opt out of withholding entirely, in which case you owe the full tax bill at filing.
The 10% default is often too low. In the 22% or 24% bracket, it leaves a gap that shows up as a balance due, and possibly an underpayment penalty if your total withholding and estimated payments fall short. Many retirees set withholding at their marginal rate. State withholding requirements vary.
After the distribution, the custodian issues Form 1099-R reporting the gross distribution, taxable amount, and federal tax withheld to you and the IRS. If you’re claiming a penalty exception, file Form 5329 with your return documenting which exception applies, or the IRS will assess the 10% automatically.