When are IRA withdrawals penalty-free?

Many Individual Retirement Account owners are aware they can be hit hard with penalty fees if they withdraw their IRA money early. You should make every effort to avoid withdrawing from retirement accounts early, particularly if you are young. By withdrawing money, you are losing decades of tax-free compounding which could cost you hundreds of thousands of dollars by the time you retire. However, here are some ways to avoid that penalty on early distributions:

• Permanent disability of IRA owner. Money can be withdrawn without penalty in the event the IRA holder becomes permanently disabled before age 59 ½. A physician must determine that, because of mental or physical disability, you are unable to engage in any gainful employment.