How Do You Avoid IRA Withdrawal Penalties?
Retirement can seem like a long way off, especially if you’ve built up a respectable nest egg and you’d like to tap into it. Unfortunately, a penalty of 10 percent of what you’ve earned (plus taxes) can be applied for withdrawing IRA funds early. Here are some ways to dodge the bullet and take advantage of your retirement before–well–before you retire. Wait until you are 59 1/2. The easiest way to avoid IRA withdrawal penalties is to wait until the baseline regulations have passed. In addition, the IRA must have been opened for 4 years after the tax year in which it was initially funded. Use premature IRA withdrawal for excessive medical expenses. If your medical bills are extreme, which the law defines as more than 7.5 percent of your adjusted gross income, you are eligible to take IRA money out early. Similarly, unemployed persons can use IRA money penalty-free to pay for health insurance premiums. Buy a house. Withdrawal penalties are waived if you take money from your IRA to purc
