- You can take money out of your IRA whenever you want, regardless of your age or reason for the withdrawal. However, taxable withdrawals before the age of 59 1/2 will be hit with a 10 percent penalty.
- Your financial institution will send you a form 1099-R that documents how much you withdrew as well as how much of the withdrawal is taxable. You must report all of your IRA distributions, even nontaxable distributions, on your income tax returns.
- The IRS waives the early withdrawal penalty in limited cases, such as higher educational expenses, permanent disabilities, medical expenses exceeding 7.5 percent of your adjusted gross income and up to $10,000 for first-time home buyer expenses. You must file Form 5329 to document the exception.
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