How to Withdraw Early From an IRA
The purpose of an IRA is to help you save for retirement. To this end you are normally supposed to leave all contributions and investment earnings in an IRA until you reach age 59 1/2. For Roth IRAs the account must also be in existence for five calendar years or more. Life can take unexpected turns, however, and you may need some of the money in your IRA. The IRS does allow you to withdraw early from an IRA under some circumstances.
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Instructions
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Consult with a financial adviser before you withdraw early for any reason. Be sure you understand the rules because improper early withdrawals immediately become subject to regular taxes plus a 10 percent penalty tax. Review the rules covering early distributions in IRS Publication 590, "Individual Retirement Arrangements" (links below).
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Withdraw contributions to a Roth IRA at your discretion. You don't get a tax deduction for Roth IRA contributions (the tax benefits come when you withdraw money after retirement). Because you've received no tax advantage for the contribution the IRS doesn't require that the money remain in a Roth IRA. Earnings and rollover funds normally must remain in the account.
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Make early withdrawals from your IRA for qualified housing or educational expenses. You may use IRA funds for the purchase or repair of a first home (there is a $10,000 limit for Roth IRAs) or for certain educational costs like college tuition without incurring the penalty tax.
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Take funds from an IRA you have inherited at any time. The beneficiary of an inherited IRA isn't subject to penalties, although regular taxes may apply.
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Use funds to cover large medical expenses. If your health insurance doesn't cover medical expenses for yourself or a member of your immediate family that exceed 7.5 percent of your annual income, you can take money out of an IRA early to pay them without penalty. You are limited to the total of the unreimbursed medical bills. Also, if you become disabled you can remove funds from an IRA anytime.
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Pay health insurance premiums using your IRA funds if you lose your job. As long as you are unemployed you may use money from an IRA to pay health insurance. As with medical expenses, the amount you can withdraw is limited to the cost of the premiums for yourself and/or members of your immediate family.
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