Video:Exceptions to the IRA Early Withdrawal Fee
with Brad MeehanIf you're withdrawing money from your IRA before reaching the proper age, you may incur fees. However, there are exceptions to these rules. This video from About.com will explain these exceptions to IRA early withdrawal fees.See Transcript
Transcript:Exceptions to the IRA Early Withdrawal Fee
Hi, I'm Brad Meehan, and today I'm going to talk to you about exceptions to your early withdrawal fee for your IRA, for About.com. You work very hard to build your retirement with the hopes that it will provide for a good retirement someday, but sometimes things come up and you need the money sooner that you thought. Today, I am going to tell you about some exceptions that could save you some of the early withdrawal fees.
Disability or Injury Allow for Exemption to IRA Early Withdrawal Fee
Here are eight tips from the About.com website on how to get these exemptions. The first way to qualify for an exemption is if the IRA holder becomes permanently disabled. The second way to qualify is, if the holder dies before they are 59 and a half years old, their estate will not be hit with a ten percent early withdrawal fee. The third way would be if the holder becomes seriously injured in an accident. The fee may be waived on the condition that the medical bills are more than 7.5% of their adjusted gross income.
Education Can Allow Early Withdrawal Exemption
If you use the money for your first time home purchase, you may recieve a lifetime limited exemption of ten thousand dollars. You can withdraw money from your IRA for higher education for you and your immediate family. Be sure to check with the IRS about using your IRA to pay for education costs. Although it's not desirable, if you withdraw money to pay back taxes after a levee has been placed on your IRA, you may qualify for an exemption.
Unemployment Can Justify IRA Early Withdrawal Exemption
If you've been unemployed for a period of more than 12 weeks and you use your IRA to pay your medical insurance premiums, you may also be exempt. Finally, if you've reached the qualifying age of 59 and a half, you may make regular penalty-free withdrawals to pay for normal living expenses.
So if you have an IRA and life throws you a curveball, say you lose your job and you want to go back to college, there are ways to make withdrawals without penalty. Thanks for watching and for more information, check us out on the web at About.com.