Early withdrawals from an IRA

If you are considering a withdrawal from one of these types of IRAs before age 59½, it will be considered an early distribution by the IRS.

In many cases, you'll have to pay federal and state taxes. There may also be a 10% penalty unless you are using the money for exceptions such as a first-time home purchase, birth or adoption expense (up to $5,000), qualified education expense, death or disability, health insurance (if you're unemployed), and some medical expenses. A 25% penalty may apply if you take a distribution within the first 2 years of opening a SIMPLE IRA.

If any of these situations apply to you, then you may need to fill out specific IRS forms. Always consult your tax advisor about your specific situation.

If you are considering withdrawing from a Roth IRA, you can always remove your original contributions without penalty. For example, if you've contributed $12,000 over 2 years, and it's grown to $13,200, you can take out the original $12,000 without taxes and penalties, but not the $1,200 of growth.

However, if you do want to withdraw the growth, there is a 10% additional tax unless you meet specific criteria:

• 5 years must have passed since your first contribution

AND you meet one of the following criteria:

• You are 59½
• The money is for a first-time home purchase, medical expenses, health insurance while unemployed, or qualified education expenses
• There is a death or disability involved

Always consult your tax advisor about your specific situation.