Both contributions and earnings of a Traditional IRA can be distributed without penalty at or after age 59.5. Distributions are included in income for federal and state tax purposes in the year they are taken.
However, there are exceptions in which some/all of the penalties can be avoided before age 59.5. These exceptions are as follows:
- You use the withdrawal (up to a $10,000 lifetime maximum) to pay for a first-time home purchase.
- You use the withdrawal to pay for qualified education expenses.
- You use the withdrawal for qualified expenses related to a birth or adoption.
- You become disabled or pass away.
- You use the withdrawal to pay for unreimbursed medical expenses or health insurance if you’re unemployed.
- The distribution is made in substantially equal periodic payments.