Early withdrawals from an IRA

In life, the unexpected happens. If you’re under age 59½ and need to withdraw from your IRA for whatever reason, you can—but it’s important to know what to expect in potential taxes and penalties, along with possible exceptions and other options for cash.


Early withdrawal from a Traditional, Rollover or SEP IRA

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Early withdrawal from a Roth IRA

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Early withdrawal from a SIMPLE IRA

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Traditional, Rollover, or SEP IRA


In many cases, you'll have to pay federal and state taxes on your early withdrawal, plus a possible 10% tax penalty.

Before age 59½, the IRS considers your withdrawal (also called a “distribution”) from these IRA types as an early withdrawal, triggering a possible tax penalty.




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Taxes and penalties

In many cases, you'll have to pay federal and state taxes on your early withdrawal, plus a possible 10% tax penalty.



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Exception

You may be able to avoid the 10% tax penalty if your withdrawal falls under certain exceptions. The most common exceptions are:

  • A first-time home purchase (up to $10,000)
  • A birth or adoption expense (up to $5,000)
  • A qualified education expense
  • A death, disability or terminal illness
  • For health insurance (if you are unemployed)
  • Some medical expenses

If any of these situations apply to you, then you may need to file IRS form 5329 to claim the exemption. For a full list of exceptions, see IRS PUB 590b at www.irs.gov. Always consult your tax advisor about your specific situation.

cash withdrawal
Withdrawal options

Withdrawals can be initiated online using the “Withdraw from your IRA” button, with your choice of how to receive the money:

  • Electronic funds transfer (EFT) to your bank (instructions must already be on file). Link your bank nowLog In Required
  • Bank wire to your bank of choice
  • Paper check sent via US Mail
  • Move cash to a Fidelity non-retirement account
  • Move shares in-kind to your Fidelity non-retirement account (must be completed with a representative by calling 800-544-6666)

Roth IRA


A Roth IRA allows you to withdraw your contributions at any time—for any reason—without penalty or taxes.


For example: If you contributed $12,000 over 2 years and your Roth IRA has grown to $13,200, you can take out the original $12,000 without taxes and penalties. However, the $1,200 of growth would incur taxes and penalties unless your Roth is 5 years old AND you meet the requirements of a qualified withdrawal.


Roth conversions are also eligible to be withdrawn without penalty or taxes, as long as they have been in your Roth for 5 years. Keep in mind, if you have done more than one conversion, each one has to satisfy its own 5 year aging period.




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Qualified Roth withdrawals

“Qualified” withdrawals (also called “qualified distributions”) from a Roth means you get your money tax free and penalty free. For your withdrawal to be considered qualified, you must:

  • own your Roth for 5 years AND
    withdraw under one of the following circumstances:
  • Age 59.5
  • First-time home purchase (up to $10,000)
  • Disability
  • Death

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Non-qualified Roth withdrawals

If you don’t meet the requirements of a qualified withdrawal above, your Roth money would be withdrawn from your account in the following order:

  1. Contributions
  2. Conversions
  3. Earnings


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Taxes and penalties

In many cases, you'll have to pay taxes plus a 10% penalty on your earnings. An early withdrawal of a Roth conversion could also be subject to a 10% recapture penalty, if it has not met the required 5 year aging period in your Roth IRA.


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Exceptions

You may be able to avoid the 10% tax penalty if your withdrawal falls under certain exceptions. The most common exceptions are:

  • A first-time home purchase (up to $10,000)
  • A birth or adoption expense (up to $5,000)
  • A qualified education expense
  • A death, disability or terminal illness
  • For health insurance (if you are unemployed)
  • Some medical expenses

If any of these situations apply to you, then you may need to file IRS form 5329 to claim the exeption. For a full list of exceptions, see IRS PUB 590b at www.irs.gov. Always consult your tax advisor about your specific situation.

cash withdrawal
Withdrawal options

Withdrawals can be initiated online using the “Withdraw from your IRA” button, with your choice of how to receive the money:

  • Electronic funds transfer (EFT) to your bank (instructions must already be on file). Link your bank nowLog In Required
  • Bank wire to your bank of choice
  • Paper check sent via US Mail
  • Move cash to a Fidelity non-retirement account
  • Move shares in-kind to your Fidelity non-retirement account (must be completed with a representative by calling 800-544-6666)

Simple IRA

When you take a withdrawal from a SIMPLE IRA before age 59½, the IRS considers your withdrawal an early distribution. 

tax document
Taxes and penalties

In many cases, you'll have to pay federal and state taxes on your early withdrawal. There may also be a 10% tax penalty. A higher 25% penalty may apply if you take a withdrawal from your SIMPLE within 2 years of your first contribution.


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Exceptions

You may be able to avoid the 10% and 25% tax penalties if your withdrawal falls under certain exceptions. The most common exceptions are:

  • A first-time home purchase (up to $10,000)
  • A birth or adoption expense (up to $5,000)
  • A qualified education expense
  • A death, disability or terminal illness
  • For health insurance (if you are unemployed)
  • Some medical expenses
If any of these situations apply to you, then you may need to file IRS form 5329 to claim the exception. For a full list of exceptions, see IRS PUB 590b at www.irs.gov. Always consult your tax advisor about your specific situation.

cash withdrawal
Withdrawal options

Withdrawals from a SIMPLE IRA can be initiated using our separate form or by calling us for assistance at 800-343-3548. You’ll have the following choices of how to receive your money:

  • Electronic funds transfer (EFT) to your bank (instructions must already be on file). EFT Form (PDF)
  • Bank wire to your bank of choice
  • Paper check sent via US Mail
  • Move cash to a Fidelity non-retirement account
  • Move shares in-kind to your Fidelity non-retirement account (must be completed with a representative by calling 800-544-6666)

What to expect when initiating a withdrawal

Withdrawals can be initiated online for Traditional, Rollover, Roth and SEP IRAs using the “Withdraw from your IRA” button. For SIMPLE IRA distributions, please use our separate form or call us for assistance at 800-343-3548.

You'll be asked:

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The amount you’re going to withdraw
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The amount of federal and state taxes you'd like withheld, if any
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Frequency of withdrawal (one time or recurring)


You’ll also choose how to receive your withdrawal:

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Electronic funds transfer (EFT) to your bank (instructions must already be on file) Link your bank nowLog In Required

bank
Bank wire to your bank of choice

writing a check
Paper check sent via US Mail

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Move cash to a Fidelity non-retirement account

two people talking about money
Move shares in-kind to your Fidelity non-retirement account (must be completed with a representative by calling 800-544-6666)

Still trying to decide if an early withdrawal is right for you?

visual chart of reasons to early withdrawal

Where to find cash, fast

Facing a sudden cash emergency? Consider tapping these sources first. Financial emergencies have a way of catching you off guard.



View full article

Here’s how much you might expect to pay in taxes on your IRAs

The rules around how IRA withdrawals are taxed can be confusing. The rules are strict and you could be penalized severely for a mistake, so be careful that you don’t run afoul of them.



View full article
ira table outlining tax expectations

FAQs

  • How will my IRA withdrawal be reported to the IRS?
    Your withdrawal will be reported on IRS Form 1099-R.
  • When will I receive a tax form for an IRA withdrawal?
    A 1099-R tax form will be issued to you, either by mail or electronically via Fidelity.com by mid to late February the year following the year you took your withdrawal.
  • Are there any other ways I could try to avoid the 10% penalty for early withdrawal?
    You can find a full list of exceptions to the 10% withdrawal penalty in IRS PUB 590b at www.irs.gov. Always consult your tax advisor about your specific situation.
  • Is there a way to withdraw from my IRA if I retired early?
    The IRS allows IRA owners to receive withdrawals from your Traditional IRA that are part of a series of substantially equal payments over your life (or your life expectancy) without having to pay the 10% additional tax, even if you receive such withdrawals before you are age 591/2. You must use an IRS-approved withdrawal method  and you must continue withdrawals for the required time period. Refer to IRS PUB 590b at www.irs.gov for additional detail. Always consult your tax advisor  about  your specific situation. You can estimate how much you will be eligible to withdraw based on the annuitization and life expectancy substantially periodic payment methods using our calculator.
  • Are early withdrawals eligible to be rolled back into an IRA?

    Once within a rolling 12-month period, the IRS allows you to roll funds back into an IRA after you have withdrawn them. This must be done within 60 days of your withdrawal. 

    Keep in mind, if you had taxes withheld when you withdrew from your IRA, those cannot be reversed. If you want to put the gross amount of your withdrawal, net withdrawal amount, and tax withholding amount back into your IRA within 60 days, you would need to pay/deposit the withheld amount out of pocket and then file with the IRS to get the taxes refunded to you the following year.

    Also, consider that if you have multiple IRAs, that may be held with different firms, you can withdraw from one and roll funds back into one of your other IRAs even if the account you roll into is held at another firm.