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What qualifies as a penalty-free early withdrawal?

Several IRS exceptions allow you to take money from a Traditional IRA before age 59½ without paying the 10% penalty. Some of the most common include:

• Qualified higher education expenses
   
• Certain unreimbursed medical expenses
   
• Health insurance premiums while unemployed
   
• First-time homebuyer costs (up to $10,000)
   
• Permanent disability
   
• Qualified birth or adoption expenses
   
• Substantially Equal Periodic Payments (SEPPs)
   
• IRS tax levies

Although these withdrawals may avoid the penalty, the money you take out is still taxable as regular income. Understanding the rules helps you access your funds appropriately when needed while avoiding unnecessary penalties.