For Mark Roberts’ Use: Sometimes it happens: you’ve been faithfully saving for retirement for years, even decades, and then catastrophe strikes. You’re experiencing hard times and you wonder if withdrawing some money from your retirement account might be the answer.

Naturally, you’re worried about being charged penalties. There are indeed some penalties for early withdrawals before age 59 1/2, but in many cases the rules allow you access to your money without repercussions. Please note that the rules are a bit different between IRAs and employer-sponsored retirement plans.

Death. If you die before you reach age 59 ½, the beneficiaries of your estate can take distributions from your IRA account, subject to the normal rules for required minimum distributions.

Disability. Taking an early withdrawal due to disability is tricky, and depends upon the type of retirement account. Don’t count on this option, but if you do become disabled check the rules carefully to see if you can take a withdrawal without penalty.

College Tuition. You can indeed withdraw funds from your IRA to pay for college tuition for yourself or dependents. There are other reasons, however, that this is often not a good idea. It’s best to fund college any other way, if you can, rather than sacrifice your retirement funds.

Home Purchase. You can withdraw up to 10,000 dollars penalty-free from your IRA to fund a home purchase. However, this is a one time allowance.

Medical Care and Insurance. If you lose your job, you can withdraw funds to cover the cost of your medical insurance. The rules for unreimbursed medical care are a bit more complicated. You can withdraw from your IRA the amount you paid if it exceeds 10 percent of your adjusted gross income (AGI) for the year. If you’re over 65, you can withdraw any amount that exceeds 7.5 percent of your AGI. With employer-sponsored plans, you can withdraw the amount allowed as a medical expense deduction under the rules of your particular plan.

SEPP Plan. You are allowed to schedule Substantially Equal Periodic Payments over your expected lifespan, or the expected combined lifespans of yourself and a beneficiary. If you change your payment schedule after establishing it, you may be subject to a penalty of 10 percent.

Qualified Domestic Relations Order. Under this order, your employer-sponsored plan may be ordered to make payments to another payee.

Reduce elective deferrals. If you deferred an amount over the allowable limit under an employer-sponsored plan, you may be able to withdraw that same amount without penalty.

Reduce excess contributions. You may be able to withdraw, without penalty, any amount you contributed over the yearly limit.
*Any discussion of tax topics is general in nature, and should not be considered tax or legal advice. Please consult your attorney or tax professional regarding your specific situation.