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What Happens if I Take a Distribution from My IRA Early? & Exceptions Thumbnail

What Happens if I Take a Distribution from My IRA Early? & Exceptions

By Dan Miller, CFP®

A question we get sometimes is “What is the penalty for early withdrawals from my IRA?” This is a common thing to wonder as sometimes life throws unexpected curveballs that drive you to search for ways fund an expense. You might need money for making a down payment on a home, medical expenses, emergencies, paying off debt; these are just some of the more common reasons.2

IRAs are designed to be long-term investments, built for retirement, so it is important to try not to dig into your nest egg unless absolutely necessary. Because there are consequences for withdrawing earlier than you’re supposed to.

“Generally, early withdrawal from an Individual Retirement Account (IRA) prior to age 59½ is subject to being included in gross income plus a 10 percent additional tax penalty.”1 This is called an early distribution penalty. However, like with all rules, there are exceptions.

See below for a chart from Appleby’s for exceptions.

Exceptions to the Early Distribution Penalty

If you are looking for a funding source for an unexpected expense, make sure to talk to your financial professional to cover all your options before deciding to withdraw from your IRA.


  1. https://www.irs.gov/newsroom/what-if-i-withdraw-money-from-my-ira
  2. https://www.investopedia.com/retirement/impacts-drawing-your-ira-early/#:~:text=IRAs%20are%20designed%20for%20long,emergencies%2C%20and%20paying%20off%20debt.
Daniel S. Miller, Kaleb Robuck, and Marcus Taylor are investment adviser representatives of, and securities and advisory services are offered through, USA Financial Securities Corp. Member FINRA/SIPC. A Registered Investment Advisor located at 6020 E Fulton St., Ada, MI 49301. Miller Financial Group and Milestone Financial Group, Inc. are not affiliated with USA Financial Securities Corp.