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What are the Withdrawal rules for SIMPLE IRA?

Withdrawals from a SIMPLE IRA are generally subject to income tax. You may also face an additional penalty depending on your age and how long the account has been open.

Additional Taxes on Early Withdrawals

• 10% Penalty

If you're under age 59½ and take a withdrawal, you’ll typically owe an additional 10% tax on the amount withdrawn.
 

• 25% Penalty

If the withdrawal occurs within the first 2 years of participating in a SIMPLE IRA plan, the penalty increases to 25%.
 

Exceptions to the Early Withdrawal Penalty

You may avoid the additional tax penalty if you're age 59½ or older or the withdrawal qualifies for an exception, such as:

• Permanent disability

• Certain higher education expenses

• First-time home purchase (buy, build, or rebuild)

• Unreimbursed medical expenses

• Health insurance premiums while unemployed

• IRS tax levy