What happens if I withdraw before 59½?

Distributions from a traditional IRA before age 59½ are taxed as ordinary income plus a 10% additional tax (the early-distribution penalty), unless an exception applies. Roth IRAs follow different ordering rules that often avoid the penalty entirely.

Roth IRA ordering rules

Roth withdrawals are deemed to come out in a fixed order, regardless of which dollars are requested:

1. Contributions — always tax-free and penalty-free, at any age.
2. Conversions, oldest first — tax-free (tax was paid at conversion); penalty-free if the conversion's own 5-year clock has run or the owner is 59½+.
3. Earnings — taxable and penalized unless the distribution is qualified (59½+ and the account's 5-year rule met).

This ordering means a Roth IRA owner can always access the sum of their lifetime contributions without tax or penalty.

Common exceptions to the 10% penalty (IRA)

The penalty (not the income tax) is waived for, among others: death or total disability of the owner; a series of substantially equal periodic payments (72(t)/SEPP); unreimbursed medical expenses above 7.5% of AGI; health insurance premiums while unemployed; qualified higher-education expenses; first-home purchase (lifetime $10,000 cap); qualified birth or adoption (up to $5,000); emergency personal expense (one per year, up to $1,000, SECURE 2.0); federally declared disaster distributions (up to $22,000); and terminal illness.

Note: the "age 55 separation from service" exception applies to workplace plans such as 401(k)s, not to IRAs.

Traditional IRA: no contribution access

Unlike a Roth IRA, a traditional IRA has no penalty-free access to "contributions" — every distribution is a proportional mix of pre-tax money and any after-tax basis (pro-rata), and the pre-tax part is taxed and, before 59½, penalized absent an exception.

Penalty-free does not mean tax-free

Every exception above waives only the 10% additional tax. Ordinary income tax still applies to the taxable portion of a traditional IRA distribution.