You can take money out of an IRA, but the rules depend on your age and the type of account

Yes, you can withdraw money from an IRA before you turn 59½. The question is whether you will pay a penalty and taxes on it. If you are under 59½ and take a distribution, the IRS charges a 10 percent early withdrawal penalty on top of income tax on the amount you withdraw — unless an exception applies. If you are 59½ or older, you can withdraw without the penalty, though you still owe income tax on the money (in a traditional IRA) or possibly no tax (in a Roth IRA, depending on how long you have held the account).

The type of IRA matters. A traditional IRA holds pre-tax money, so every dollar you withdraw counts as income and is taxed at your ordinary rate. A Roth IRA holds after-tax money you contributed, plus investment gains. You can withdraw your contributions at any time without penalty or tax. You can withdraw the gains only after age 59½ and if you have held the account for at least five tax years — otherwise you pay the 10 percent penalty and income tax on the gains.

Key Takeaways

  • Withdrawals before age 59½ from a traditional IRA trigger both a 10 percent penalty and income tax, unless a specific exception applies.
  • Roth IRA contributions (the money you put in) can be withdrawn at any time without penalty or tax, but gains cannot be touched before 59½ without consequences.
  • Exceptions to the early withdrawal penalty include medical expenses over 7.5 percent of your income, disability, first-time home purchase (up to $10,000 lifetime), and substantially equal periodic payments.
  • Once you turn 59½, you can withdraw from a traditional IRA without penalty, though you still pay income tax on the full amount withdrawn.
  • At age 73, you must begin taking required minimum distributions (RMDs) from traditional IRAs, whether you need the money or not.

The 10 percent early withdrawal penalty and when it does not explore

The IRS charges a 10 percent penalty on early withdrawals from traditional IRAs and on gains withdrawn from Roth IRAs before age 59½. This is separate from income tax. However, the penalty does not explore if you meet one of several exceptions.

The most common exceptions are: you are disabled; you are withdrawing to pay unreimbursed medical expenses that exceed 7.5 percent of your adjusted gross income in that year; you are a first-time homebuyer taking up to $10,000 lifetime (this is a one-time limit, not annual); you are withdrawing to pay health insurance premiums while unemployed; you are taking substantially equal periodic payments (SEPP) based on your life expectancy; or you are withdrawing due to an IRS levy. There are others, but these cover most situations. The exception does not eliminate income tax — it only removes the 10 percent penalty.

Substantially equal periodic payments (SEPP) — a way to avoid the penalty

If you need regular income before 59½, you can set up substantially equal periodic payments (also called a 72(t) distribution plan, after the tax code section). This method lets you withdraw money from a traditional IRA without the 10 percent penalty, even if you are under 59½. You must follow strict rules: the payments must be calculated using one of three IRS-approved methods, they must continue for at least five years or until you turn 59½, whichever is longer, and you cannot change the amount or stop early without triggering the penalty retroactively on all prior withdrawals.

The three calculation methods produce different payment amounts. The IRS publishes life expectancy tables and interest rate assumptions each year that affect the calculation. Because the rules are precise and the penalty for getting it wrong is steep, most people work with a tax professional or financial advisor to set up a SEPP plan. Once it is in place, you receive the same payment each month or quarter for the required period.

Roth IRA contributions versus gains — the key distinction

A Roth IRA has a simpler withdrawal rule for contributions. You can withdraw the money you personally contributed at any time, at any age, without penalty or tax. The IRS knows how much you contributed each year because you report it on Form 5498. If you contributed $5,000 per year for ten years, you can withdraw $50,000 anytime without consequence.

The gains — the investment earnings on your contributions — are locked until age 59½ and the five-year holding period. If you withdraw gains before meeting both conditions, you pay income tax on the gains and the 10 percent penalty. The five-year clock starts on January 1 of the year you first contributed to any Roth IRA, not on each individual contribution. If you converted a traditional IRA to a Roth, the five-year rule applies to the converted amount as well, and there is a separate five-year period for conversions.

How to actually withdraw the money

Contact your IRA custodian — the bank, brokerage, or investment firm holding your account. You can request a withdrawal by phone, mail, or online portal, depending on the institution. Some custodians process withdrawals within a few business days; others may take longer. You will need to specify the amount and whether you want a check mailed to you or a direct transfer to your bank account.

The custodian will withhold taxes on the withdrawal unless you instruct them otherwise. For a traditional IRA, they withhold 10 percent of the distribution by default (though you can request a different rate or no withholding). For a Roth IRA, they withhold nothing if you are withdrawing only contributions, because those are not taxable. If you are withdrawing gains from a Roth before age 59½, they will withhold 10 percent unless you tell them not to.

You will receive a Form 1099-R in January reporting the withdrawal. This form shows the gross amount withdrawn, the amount withheld, and whether the withdrawal qualifies for an exception. You report this on your tax return. If you claimed an exception but did not report it correctly, or if the custodian did not code the exception properly, you may owe the penalty when you file.

Required minimum distributions (RMDs) at age 73

Once you turn 73, the IRS requires you to withdraw a minimum amount from your traditional IRA each year. This is called a required minimum distribution (RMD). The amount is calculated by dividing your account balance on December 31 of the prior year by a life expectancy factor published by the IRS. If you do not take the RMD, the IRS charges a 25 percent penalty on the amount you should have withdrawn (this was reduced from 50 percent in 2023).

Roth IRAs do not require distributions during the account holder's lifetime. This is one reason some people convert traditional IRAs to Roths — to avoid RMDs and let the money grow tax-free longer. However, beneficiaries who inherit a Roth IRA must take distributions under different rules.

Taxes owed on withdrawals from a traditional IRA

Every dollar you withdraw from a traditional IRA is taxed as ordinary income in the year you withdraw it. If you withdraw $20,000, that $20,000 is added to your other income for the year and taxed at your marginal rate. If you are in the 22 percent tax bracket, you owe roughly $4,400 in federal income tax on that withdrawal (plus state tax if your state has income tax, and possibly the 10 percent penalty if you are under 59½ and no exception applies).

The withholding the custodian takes out is not the final tax bill — it is just a prepayment. When you file your tax return, the IRS calculates your actual tax liability. If too much was withheld, you get a refund. If too little was withheld, you owe more. This is why it matters whether you request no withholding or a specific rate: if you do not withhold enough, you may owe a large bill at tax time.

Frequently Asked Questions

Can I withdraw from my IRA to pay off credit card debt?

Yes, you can withdraw for any reason, but you will pay income tax and possibly the 10 percent penalty unless you are 59½ or older or an exception applies. Credit card debt does not may have access to as an exception, so withdrawing to pay it off usually costs you significantly in taxes and penalties. It is generally cheaper to pay the credit card interest than to withdraw early from an IRA.

What happens if I withdraw from my IRA and then want to put the money back?

You can roll the money back into an IRA within 60 days of the withdrawal, and it will not be taxed or penalized. This is called a rollover. However, you can do this only once per 12-month period across all your IRAs. If you miss the 60-day window, the withdrawal is final and taxable.

Do I have to pay state income tax on an IRA withdrawal?

Yes, if your state has an income tax. The withdrawal is added to your state taxable income just as it is for federal tax. Some states have different rules for retirees or specific types of income, so check your state's tax authority website for details.

Can I withdraw from my spouse's IRA?

No, you cannot withdraw from your spouse's IRA unless you are the beneficiary and the account holder has died. During their lifetime, only the account owner can withdraw. If you are married and both have IRAs, you each control your own account.

What if I need money but do not want to withdraw from my IRA?

Some IRAs allow loans, but only certain types — specifically Solo 401(k)s and some employer-sponsored plans. Traditional and Roth IRAs do not allow loans. If you need cash, you might consider a personal loan, home equity line of credit, or borrowing from a 401(k) if your employer plan allows it, rather than withdrawing from an IRA.