Early Withdrawals Exceptions

What are the exceptions to the 10 % penalty on early distributions?

The early withdrawals exceptions in which the 10 % additional tax does not apply include:

• Distributions made to a beneficiary or to the estate of the plan participant on or after his or her death.

• Distributions made because you are totally and permanently disabled.

• Distributions made as part of a series of substantially equal periodic payments over:
  • your life expectancy or

  • the joint life expectancy of your and your beneficiary.

• Distributions paid to you to the extent you have deductible medical expenses (exceeding 7.5% of your AGI) whether or not you itemize deductions for the tax year.

• Distributions made to you after you separated from service if the separation occurred during or after the calendar year in which you reached age 55 (does not apply to IRAs)

• Distributions made from an IRA to pay for qualified higher education expenses for yourself, your spouse, your children or grandchildren to the extent that the distribution does not exceed the expenses for the taxable year.

• Distributions from an IRA to pay for a first time home for:
  • yourself,

  • your spouse,

  • your children, or

  • your grandchildren, up to $10,000.

• Qualified reservist distributions for an individual called to active duty after September 11, 2001 and before December 31, 2007 for a period of more than 179 days.

• Distributions after August 17, 2006 for qualified public safety employees separated from service after reaching age 50. Does not apply to qualified government plans.