- You may withdraw money from your IRA to pay for deductible medical expenses. You may do this without paying a penalty of 10 percent to the IRS as long as the amount of the bill exceeds 7.5 percent of your adjusted gross income. You must make the withdrawal in the same year that the medical bills are incurred.
- You may withdraw money from your IRA penalty free if you're totally and permanently disabled. You must show disability to have the penalty waived. You may file and collect Social Security Disability or collect disability from a private insurance carrier. In effect, you're retiring early.
- You may pay for health insurance premiums by withdrawing money from your IRA. You must be unemployed for at least 12 weeks, however, or the IRS does not consider this a qualified withdrawal of funds. You may have the funds sent directly to the insurance company or deposited into your bank account and then pay the premiums out of your account. If you choose to have the money deposited into your bank account, be sure you keep good records of all transactions. This ensures that you do not get hit with a penalty for improper withdrawals and use of funds.
- You may withdraw up to $10,000 from your IRA to make a down payment on a home. This This exclusion isn't limited to just your first home, but the lifetime maximum exclusion is $10,000. You may, therefore, withdraw in any increment you wish. For example, you may withdraw $4,000 for one home, $2,000 for another home and $4,000 for yet another home.
- You may withdraw money from an IRA to pay for college expenses. You don't have to use the funds for your own education, though. You may generally use the funds for a spouse, your child, grandchild or another immediate family member. You may use the funds for tuition, books, supplies room and board and even post-secondary education.
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