9 ways to withdraw money early from your IRA – without paying a penalty

9 ways to withdraw money early from your IRA – without paying a penalty

If you withdraw money from your traditional Individual Retirement Account (IRA) before age 59½, you'll likely face a penalty. After all, IRAs were designed as a tax-advantaged way to encourage individuals to save for retirement. One way to persuade people to keep the funds intact is by making it painful to withdraw them before they reach retirement “” or at least, retirement age. 

Following that reasoning, the IRS imposes a 10% penalty (plus income tax in most cases) on early withdrawals, as it dubs funds taken out by those under 59½.

However, there are exceptions. The IRS names certain hardship provisions that allow you to take your money out of your IRA early without paying the 10% penalty. You must meet specific circumstances to make these "hardship withdrawals."

Here are nine ways to take traditional IRA early withdrawals without paying a penalty. 

1. Unreimbursed medical expenses

Meeting medical expenses that exceed 7.5% of your adjusted gross income and are not covered by insurance count as a hardship withdrawal, and so skip the penalty. You must pay for these expenses the same year that you take the distribution but you do not have to itemize your taxes to take advantage of the penalty exception.

2. Health insurance