Age 59 and under: Early IRA withdrawal penalties—with some exceptions.
Your deductible contributions and earnings (including dividends, interest, and capital gains) will be taxed as ordinary income.
The U.S. government charges a 10% penalty on early withdrawals from a Traditional IRA, and a state tax penalty may also apply. You may be able to avoid a penalty if your withdrawal is for:
|First-time home purchase||Some types of home purchases are eligible. Funds must be used within 120 days, and there is a pre-tax lifetime limit of $10,000.
|Educational expenses||Some educational expenses for yourself and your immediate family are eligible.
|Disability or death||If you’re disabled, you can withdraw IRA funds without penalty. If you pass away, there are no withdrawal penalties for your beneficiaries.
|Medical expenses||You can avoid an early withdrawal penalty if you use the funds to pay unreimbursed medical expenses that are more than 7.5% of your adjusted gross income (AGI).
|Health insurance||If you’re unemployed for at least 12 weeks, you may withdraw funds to pay health insurance premiums for yourself, your spouse, or your dependents.
|Periodic payments||You can avoid an early withdrawal penalty if you choose to receive your funds on a regular distribution schedule.1
|Involuntary distribution||If a distribution is the result of an IRS tax levy, IRS Form 5329 explains how to claim your penalty exception.
|Reservist distributions||Members of the National Guard and reservists can take penalty-free distributions if they are called to active duty for at least 180 days. Some restrictions apply.|
Age 59½ to 70: No withdrawal restrictions.
Once you reach age 59½, you can withdraw funds from your Traditional IRA without restrictions or penalties. But keep in mind that your deductible contributions and earnings (including dividends, interest, and capital gains) will be taxed as ordinary income. Learn more about Traditional IRA rules.
Age 70½ and over: Withdrawals are mandatory.
Beginning in the year you turn 70½, you must start taking an annual Required Minimum Distribution (RMD) from your Traditional IRA. If you don’t make withdrawals, you’ll have to pay a 50% penalty on the amount you should’ve withdrawn.
Learn more about RMDs.
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Get answers to your Traditional IRA questions.
1. Schwab does not currently perform these substantially equal periodic payment (72(t)) calculations. You should speak with a tax advisor. Find more information on these calculation methods in IRS Revenue Ruling 2002-62.
This tax information is not intended to be a substitute for specific individualized tax, legal, or investment planning advice. Where specific advice is necessary or appropriate, Schwab recommends that you consult with a qualified tax advisor, CPA, financial planner, or investment manager.