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IRA Withdrawal Rules

To receive funds from your self-directed IRA without penalty, you must reach the age of 59 ½ (the Roth IRA also requires that the account has been open for at least five years).

Required Minimum Distributions

Traditional IRA, SEP, SIMPLE, and Solo 401(k) account holders must begin taking required minimum distributions (RMD) from their accounts beginning April 1 of the following year after reaching age 72.

RMD is calculated using a special formula relating to life expectancy; please consult with IRS Publication 590 and/or a tax consultant. RMDs are calculated for each applicable account. If you have multiple accounts with RMDs, you’re not required to take a withdrawal from each account, but you should take into account your cumulative total required distribution when taking your distribution(s).

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Special Note on Premature Distributions

You can generally withdraw funds from a Traditional or Roth IRA without penalty at any time after you have attained the age of 59½. If you decided to withdraw money from your Traditional or Roth IRA account prior to reaching age 59½ you will be subject to a 10-percent early distribution penalty tax (with the Roth IRA, you can withdraw any contribution as long as it has been in the account for five years).

Are there exceptions to the 10-percent early distribution penalty tax?

Yes, there are several exceptions to the 10% early distribution penalty tax. Among the exceptions recognized under the Internal Revenue Code are the distributions due to the following events:

Death
Disability
Qualified higher education expenses
The distributions are part of a series of substantially equal payments
Unreimbursed medical expenses that exceed 7.5% of your adjusted gross income
Medical insurance premiums
Expenses associated with buying or building a first home
Payment of any IRS levy
Qualified reservist distribution

For additional information regarding IRA withdrawal rules or the exceptions to the early distribution rules, please see IRS Publication 590.

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