When can I use my Traditional IRA assets?

Unlike many employer-sponsored retirement plans in which access to assets might be limited until the participant has a change of employment or reaches retirement age, access to IRA assets is guaranteed, always. Most Traditional IRA distributions taken before the IRA owner reaches age 59½ are subject to a 10 percent early distribution penalty tax. This is to discourage people from taking Traditional IRA distributions at an early age rather than keeping the assets for retirement. The 10 percent early distribution penalty tax does not apply in the following situations.

  • Age 59½
  • Death
  • Disability
  • Certain medical expenses
  • Health insurance premiums following unemployment
  • First home buyer expenses
  • Higher education expenses
  • IRS levy
  • Series of substantially equal periodic payments
  • Qualified reservist distributions

IRS Publication 590, Individual Retirement Arrangements (IRAs), provides more detail on these penalty tax exceptions.

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