IRA Early Withdrawal Exception
There are several exceptions to the IRA early withdrawal tax penalty. These exemptions are outlined in details in the following sections of this TaxBuzz Guide.
Overview
Early withdrawal penalty: 10%
Applies to: Taxable Distributions to taxpayers under the age of 59½
Related IRC and IRS Publications and Forms
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Form 5329 – Additional Tax on Qualified Plans (including IRAs)
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Form 5329 - Instructions
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Pub 530 – First Time Homebuyers
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Pub 575 – Pension and Annuity Income
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Pub 590-B –Distributions from Individual Retirement Plans (IRAs)
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Sec 72(t)(2)
Generally, if a taxpayer is under age 59-1/2 and withdraws assets (money or other property) from a qualified plan including Traditional IRAs, the taxpayer must pay a 10% additional tax, commonly referred to as a penalty (IRC Sec. 72(t)). This tax is 10% of the part of the distribution that the taxpayer was required to include in gross income for the year of the distribution. Several exceptions provide relief from the early withdrawal penalty, as explained in this guide.