When Can I Use My IRA? Age 59½, Penalties, and Exceptions

You can take money out of a traditional IRA without the 10% early withdrawal penalty once you reach age 59½, and you can pull your Roth IRA contributions out at any age tax-free and penalty-free.¹ Before 59½, most traditional IRA withdrawals cost you income tax plus a 10% penalty, unless the reason for the withdrawal fits one of the exceptions written into federal law. The IRA withdrawal rules and penalties below cover both accounts, the situations that waive the penalty, and the mandatory withdrawals that eventually kick in.

What Changes at Age 59½

Once you turn 59½, the 10% early withdrawal penalty stops applying to traditional IRA distributions.¹ You can withdraw as much as you want, whenever you want. The distribution is still taxed as ordinary income, because the money went in pre-tax, but no additional penalty is layered on top.

Your custodian withholds 10% for federal income tax by default when you take a distribution.² You can change that rate to anywhere between 0% and 100% by filing Form W-4R with the custodian. If you’re in a bracket higher than 10%, the default withholding won’t cover your bill and you’ll owe more at tax time.

Every distribution is reported on Form 1099-R, with a copy going to both you and the IRS.³ The form carries a distribution code that tells the IRS whether the withdrawal was normal, early, or exception-eligible.

The 10% Early Withdrawal Penalty

Withdraw from a traditional IRA before 59½ with no exception, and the IRS adds a 10% penalty to the taxable amount of the distribution.⁴ That penalty sits on top of the income tax you already owe. Someone in the 22% bracket who pulls $50,000 out at age 55 would owe roughly $11,000 in income tax and another $5,000 in penalty — $16,000 before the money reaches them.

The penalty hits the full taxable portion of the withdrawal, whether that money represents your original contributions or investment growth. You report it on Form 5329 with your tax return for the year you took the distribution.⁵

Situations That Waive the Penalty

Federal law recognizes more than a dozen situations in which you can take money from your IRA before 59½ without the 10% penalty.⁴ You still owe income tax on the distribution; the exception only removes the penalty.

First Home Purchase

You can withdraw up to $10,000 over your lifetime from a traditional IRA to buy, build, or rebuild a first home without paying the 10% penalty.⁴ The $10,000 is a per-person lifetime cap that applies across all of your traditional IRAs combined. The home does not have to be for you: it can be a principal residence for your spouse, child, grandchild, or parent or grandparent of you or your spouse.⁶ The buyer must not have owned a principal residence in the two years before the purchase date, and the funds have to be used within 120 days of the distribution.

Higher Education Expenses

You can withdraw any amount penalty-free for qualified higher education expenses at an eligible institution. Covered costs include tuition, fees, books, supplies, equipment, and — for students enrolled at least half-time — room and board.¹ There is no dollar cap, but the withdrawal cannot exceed your actual qualifying costs for the tax year. The expenses can be for you, your spouse, your children, or your grandchildren, and they do not need to be your tax dependents.

Medical Expenses and Health Insurance

If your unreimbursed medical expenses exceed 7.5% of your adjusted gross income in a given year, you can withdraw the excess amount penalty-free.¹ On an $80,000 AGI, 7.5% is $6,000, so $12,000 in unreimbursed bills would let you withdraw $6,000 penalty-free.

A separate exception covers health insurance premiums if you’ve been unemployed and collected unemployment benefits for at least 12 consecutive weeks. Those withdrawals are penalty-free when used to pay premiums for you, your spouse, and your dependents.

Birth or Adoption

Each parent can withdraw up to $5,000 per child from their IRA without the 10% penalty after a birth or a finalized adoption.¹ The distribution has to be taken within one year of the birth or the date the adoption becomes final. You can repay these funds back into your IRA later without the repayment counting against your annual contribution limit.

Disability and Terminal Illness

If you become totally and permanently disabled, you can access your IRA at any age without the penalty.¹ The IRS defines that as being unable to perform any substantial work because of a physical or mental condition expected to result in death or last at least 12 continuous months.⁷ You need medical proof available if the IRS asks.

A separate exception applies if you are terminally ill. When a physician certifies a condition reasonably expected to result in death within 84 months or less, your IRA distributions are exempt from the penalty.⁵ Neither the disability nor the terminal illness exception has a dollar cap.

Domestic Abuse Survivors

Starting in 2024, the SECURE 2.0 Act created a penalty exception for victims of domestic abuse. You can withdraw the lesser of $10,000 (adjusted for inflation) or 50% of your vested account balance, as long as the distribution is taken within one year of the abuse.⁸ You self-certify eligibility; no police report or court order is required. You have three years to repay the distribution to an eligible retirement plan.

Other Exceptions

Distributions taken because the IRS levied your retirement account.
Distributions taken by military reservists called to active duty for at least 180 days, during the service period.
Distributions to a beneficiary after the account owner’s death, regardless of the beneficiary’s age.

Substantially Equal Periodic Payments

If you need ongoing access to your IRA before 59½ and none of the specific exceptions fit, you can set up a series of substantially equal periodic payments, sometimes called a SEPP or 72(t) plan. You commit to withdrawing a fixed amount each year based on your life expectancy, and the 10% penalty is waived on each payment in the series.⁹ The IRS recognizes three calculation methods: the required minimum distribution method, the fixed amortization method, and the fixed annuitization method.

Once a SEPP starts, you cannot change or stop the payments until the later of five years from your first payment or the date you turn 59½.⁹ Modify the schedule early — by taking more or less than the calculated amount — and you’ll owe the 10% penalty retroactively on every distribution taken since the SEPP began, plus interest. It’s a serious commitment that works best when you genuinely need steady income for several years.

Roth IRA Withdrawal Rules

Roth IRAs follow a different set of rules because contributions go in with after-tax dollars. When you take money out, the IRS pulls it in a fixed order: contributions first, then conversion amounts, then earnings.¹⁰ That ordering is what makes a Roth more flexible than a traditional IRA if you may need the money before retirement.

Contributions Come Out Freely

You can withdraw the amount you contributed to a Roth IRA at any time, at any age, for any reason, with no income tax and no penalty.¹ The IRS treats these as a return of your own already-taxed dollars. This applies only to direct contributions, not conversions or earnings.

Earnings and the Five-Year Rule

To pull earnings out tax-free and penalty-free, two conditions must be met: your Roth IRA has to have been open for at least five years, and you must be at least 59½ (or qualify under the disability, death, or first-home exceptions).¹⁰ The five-year clock starts on January 1 of the tax year of your first contribution to any Roth IRA. A first contribution for tax year 2022 puts the start date at January 1, 2022, and the end at December 31, 2026.

Withdraw earnings before both conditions are met, and the earnings portion is taxed as ordinary income and may face the 10% penalty. The same exceptions that apply to traditional IRAs can waive the penalty, but income tax still applies to those earnings unless the five-year rule is also satisfied.

Converted Amounts Have Their Own Clock

Money converted from a traditional IRA to a Roth IRA carries a separate five-year holding period. That clock starts on January 1 of the year of the conversion and runs independently of the contribution clock.¹¹ Withdraw converted funds before that period ends while you’re under 59½, and the 10% penalty applies to the portion that hadn’t been taxed. Each conversion carries its own separate five-year clock.

Required Minimum Distributions

Eventually the IRS forces you to start taking money out of a traditional IRA. These mandatory annual withdrawals are called required minimum distributions, and the starting age depends on your birth year:¹²

Born 1951 through 1959: RMDs begin at age 73.¹³
Born 1960 or later: RMDs begin at age 75.¹³

Your RMD each year is your IRA balance as of December 31 of the prior year, divided by a life expectancy factor from IRS tables. Custodians will generally do the math, but the responsibility for taking the correct amount is yours.

Miss an RMD, or take less than the full amount, and the shortfall is hit with a 25% excise tax.¹² Catch it and correct it within two years, and the penalty drops to 10%. A calendar reminder or automated distribution schedule from your custodian is worth setting up.

Roth IRA owners never have to take RMDs during their lifetime.¹⁴ The full balance can keep growing tax-free for as long as the owner lives.

Inherited IRAs Follow Their Own Rules

If you inherited an IRA, the withdrawal rules depend on your relationship to the original owner and when they died. A surviving spouse has the most flexibility and can roll the account into their own IRA, treating it as if it had always been theirs under the standard rules.¹⁵ A spouse can also keep it as an inherited account and take distributions based on their own life expectancy.

Most other beneficiaries who inherited from someone who died in 2020 or later must empty the entire account by the end of the tenth year following the year of death.¹⁵ Certain “eligible designated beneficiaries” — minor children of the deceased, disabled or chronically ill individuals, and people not more than 10 years younger than the deceased — can stretch distributions over their own life expectancy. A minor child’s stretch period ends at the age of majority, when the 10-year clock starts.

The 10% early withdrawal penalty never applies to inherited IRA distributions, regardless of the beneficiary’s age. Distributions from an inherited traditional IRA are still taxed as ordinary income.

The 60-Day Rollover Rule

If a distribution is paid directly to you and you want to avoid the tax hit, you have 60 days to deposit the funds into another IRA, or back into the same one.¹⁶ This indirect rollover effectively undoes the distribution. Miss the 60-day window, and the full amount is a taxable distribution, plus the 10% penalty if you’re under 59½.

You get only one indirect IRA-to-IRA rollover in any 12-month period, and the IRS aggregates all your IRAs — traditional, Roth, SEP, and SIMPLE — for that limit.¹⁶ Direct trustee-to-trustee transfers, where the money never passes through your hands, aren’t subject to the once-per-year limit and are the safer way to move IRA funds between institutions.

Claiming an Exception on Your Tax Return

When you take an early distribution that qualifies for an exception, file Form 5329 with your tax return to tell the IRS the penalty doesn’t apply.⁵ On line 2 you enter a two-digit exception code. Common codes include:

02: Substantially equal periodic payments
03: Total and permanent disability
05: Unreimbursed medical expenses exceeding 7.5% of AGI
07: Health insurance premiums while unemployed
08: Qualified higher education expenses
09: First home purchase (up to $10,000)
19: Qualified birth or adoption distribution
20: Terminal illness

Your Form 1099-R may still show the distribution as an early withdrawal (code 1 in box 7) even if you qualify for an exception. Filing Form 5329 is how you override that default and avoid paying a penalty you don’t owe. If more than one exception applies to the same distribution, use code 99.

1
Internal Revenue Service. Retirement Topics – Exceptions to Tax on Early Distributions
2
Internal Revenue Service. Pensions and Annuity Withholding
3
Internal Revenue Service. 2025 Instructions for Forms 1099-R and 5498
4
Office of the Law Revision Counsel. 26 USC 72 – Annuities; Certain Proceeds of Endowment and Life Insurance Contracts
5
Internal Revenue Service. Instructions for Form 5329
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Office of the Law Revision Counsel. 26 USC 72 – Annuities; Certain Proceeds of Endowment and Life Insurance Contracts
7
Office of the Law Revision Counsel. 26 USC 22 – Credit for the Elderly and the Permanently and Totally Disabled
8
Internal Revenue Service. Certain Exceptions to the 10 Percent Additional Tax
9
Internal Revenue Service. Substantially Equal Periodic Payments
10
Internal Revenue Service. Publication 590-B (2025), Distributions from Individual Retirement Arrangements (IRAs) – Section: What Are Qualified Distributions?
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Internal Revenue Service. Publication 590-B (2025), Distributions from Individual Retirement Arrangements (IRAs)
12
Internal Revenue Service. Retirement Plan and IRA Required Minimum Distributions FAQs
13
Federal Register. Required Minimum Distributions
14
Internal Revenue Service. Retirement Topics – Required Minimum Distributions (RMDs)
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Internal Revenue Service. Retirement Topics – Beneficiary
16
Internal Revenue Service. Rollovers of Retirement Plan and IRA Distributions