I am 55 years old and need cash. Can I tap into my IRA without penalty? -Dlight News

 I am 55 years old and need cash.  Can I tap into my IRA without penalty?

Dear Dan, I could use some cash but my only savings are in an IRA. I’m 55 and have heard that once you reach 55 there is an exception to the 10% penalty for withdrawals before 59½ but I haven’t found anything on that except for 401(k)s. Can I withdraw money from my IRA without penalty? -Sid Dear Sid, The age 55 penalty exception only applies to qualified retirement plans like 401(k)s and only to those who are separated from service. There are other circumstances that allow distributions from IRAs without penalty before age 59½. Many of these also apply to retirement plans, but not all. Below are 11 exceptions that have been on the books for years that apply to IRA accounts. Maybe one will apply to you. You are the beneficiary of the deceased IRA owner. (Note: Surviving spouses under age 59½ who roll their deceased spouse’s IRA into their own IRA are not exempt from the 10% penalty unless one of the following applies.) You are totally and permanently disabled. (Generally, a physician must determine that you cannot perform any substantial gainful activity and that your condition is expected to end in death or continue indefinitely.) You have unreimbursed medical expenses that exceed 7.5% of your AGI. . (This looks like a qualifying expense deduction on Schedule A but you don’t have to use this provision to avoid the penalty.) Distributions due to periods of unemployment do not exceed the cost of your medical insurance. (You must receive unemployment compensation) Distributions are made under a series of substantially equal periodic payments Distributions do not exceed your qualified higher education expenses. (Generally, the tuition, fees, books, supplies, and equipment required for a student at an eligible educational institution. The education must be for you, your spouse, or your or your spouse’s children or grandchildren.) You use the distribution to buy, build, or renovate a first home. create (The maximum distribution exemption from penalty is $10,000) The distribution is due to an IRS levy of an IRA or retirement plan. The distribution is a qualified reserve distribution. A distribution is a qualified birth or adoption distribution. (Maximum $5,000 per birth or adoption) In addition to the above, a new penalty amnesty was created with effective dates in the next few years that many refer to as the SECURE Act 2.0. This is part of the Consolidated Appropriations Act of 2023 that was signed into law on December 29, 2022. The two that will be implemented now are for “qualified disaster recovery” and an exemption for taxpayers who meet the definition of “terminally ill”. ” Read: What you need to know now about Secure 2.0 I’ve only highlighted a few details or qualifications today. For each of the above penalty exemptions there are in some cases more, much more. Additional details can be found in Publication 590 but I recommend discussing this matter with your advisor before commencing distribution. If you have a question for Dan, please email him with ‘MarketWatch Q&A’ in the subject line. Dan Moisand is a financial planner at Moisand Fitzgerald Tamayo serving clients nationwide from offices in Orlando, Melbourne and Tampa Florida. Their comments are for informational purposes only and are not a substitute for personal advice. Consult your advisor about what is best for you. Some reader questions have been edited to help introduce the topic.

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