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Retirement Account Withdrawal Rules: A Summary

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Your Age Withdrawal Rules
Younger than 591/2

"Premature" withdrawals
IRAs: Withdrawals are generally subject to a 10% penalty, unless you become disabled and cannot work, you die, or you set up a plan to make regular, equal withdrawals over your life. You cannot borrow from an IRA.

Other exceptions to the rule against early withdrawals are:
  • To pay health insurance premiums. This exception applies only if you are unemployed or were recently unemployed and meet certain conditions.
  • To pay higher education expenses.
  • To help pay for your first home. This exception has a lifetime distribution limit of $10,000.


401(k) accounts: You can borrow from your 401(k) but cannot withdraw money from it except for an IRS-recognized hardship, such as to pay medical bills, prevent eviction or foreclosure, pay college tuition, or make a down payment on your primary residence. And you still must pay the 10% penalty on early withdrawals. There is one important exception: If you're 55 or older and actually retired, you may make penalty-free withdrawals.
591/2 to 701/2


"Ordinary" withdrawals
Withdrawals are optional.

Traditional IRAs: The amount is included in your gross income for income tax purposes.

Roth IRAs: You are free to take out the money that you put into your Roth IRA anytime you want, and it will never be subject to a tax. However, the interest that your money earned while it was in the IRA is a different matter. Interest is tax free only if at least five years have passed since you established the Roth IRA.
701/2 or older


"Delayed" withdrawals
Traditional IRAs: Withdrawals are mandatory. The minimum amount is determined by your age and that of your oldest beneficiary.

Roth IRAs: Withdrawals are optional.

Copyright © 2000 Nolo.com Inc.




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