Under most circumstances, you cannot withdraw money early from your IRA without incurring a 10 percent penalty tax on the distribution. In specific cases, though, you can remove a certain amount of money from your account without incurring a penalty. For instance, you can withdraw money from an IRA to pay for school for yourself or your spouse. You may also withdraw it to pay for a new home if you are a first time buyer and to pay for medical expenses that are not eligible for reimbursement.
Contact your bank or financial institution to withdraw the money from your IRA. You may want to set up an appointment to speak with your financial adviser before withdrawing the money.
Specify that you are removing the money for a reason that is penalty free, so that you do not need to file the 10 percent penalty tax on your income taxes.
Complete a withdrawal form to take the money out or give specific instructions over the phone. Designate whether you would like the money in cash, as a check or transferred to another bank account.
- If you simply need the money to cover your expenses for a certain amount of time and are positive you will be able to put the entire amount back in your account within 60 days, you can withdraw from your IRA without having to pay the penalty.
- If you are using money from your IRA to pay for medical expenses, the amount of the expenses must be more than 7.5 percent of your adjusted gross income.
- Keep in mind that you will have to pay income tax on withdrawals from a traditional IRA and, in some cases, on the interest earned on certain Roth IRAs. Your financial institution should send you form 1099-R, so that you can file properly.
- Do You Deduct a Penalty for Early Withdrawal From Adjusted Gross Income?
- Are Distributions From a Roth IRA Taxable?
- Can an Employee Roll Over a 401(k) Into a Self-Directed IRA While Still Employed?
- How to File Taxes on a 401(k) Early Withdrawal
- How to Transfer an Existing IRA
- How to Waive 401(k) Early Withdrawal Penalties