What are the exceptions to the IRA early withdrawal penalty?

How the exceptions work

The 10% additional tax applies to the taxable part of an early distribution, meaning a distribution before age 59½. Publication 590-B says there are several exceptions to the age 59½ rule and lists them. An exception does not make the withdrawal tax free: the taxable part is still included in your income and taxed at your regular rate. It only removes the extra 10%. Some exceptions cover the whole distribution, and others cover only a capped or expense-limited part, which is why the calculator above asks for a dollar input.

All-or-nothing exceptions

Disability. You must be able to furnish proof that you cannot do any substantial gainful activity because of a physical or mental condition, and a physician must determine that the condition can be expected to result in death or to be of long, continued and indefinite duration. Terminal illness. A physician must certify that your illness can reasonably be expected to result in death in 84 months or less. The certification has required contents: the statement, a narrative of the evidence, the physician’s name and contact information, the examination or review date, the signature date and an attestation. A physician cannot certify their own terminal illness. Death. If the owner dies before 59½, assets can go to a beneficiary or the estate without the 10% tax, but a surviving spouse who elects to treat the IRA as their own may face the tax on later pre-59½ withdrawals. IRS levy and qualified reservist distributions are also whole-distribution exceptions; the reservist one requires a call to active duty after September 11, 2001, for more than 179 days or indefinitely, with the distribution made between the order and the end of the active duty period. A corrective distribution of an excess contribution and its earnings avoids the tax when made by the due date, including extensions, of the return (for distributions on or after December 29, 2022).

Substantially equal periodic payments

Payments over your life or life expectancy, or the joint lives of you and a beneficiary, avoid the 10% tax. Notice 2022-6 describes three methods: the required minimum distribution method, fixed amortization and fixed annuitization. The catch is the recapture tax. If you modify the payments before the later of the fifth anniversary of the first payment or the date you reach 59½, for reasons other than death or disability, you owe the tax that would have applied in prior years plus interest. A one-time switch to the required minimum distribution method is allowed. The 72(t) SEPP calculator models the payments.

Capped and expense-limited exceptions

First home: up to $10,000 across your lifetime, spent on qualified acquisition costs before the close of the 120th day after you receive it, for yourself, your spouse, a child, grandchild, parent or other ancestor of you or your spouse, who is a first-time homebuyer (no present interest in a main home during the 2 years before the acquisition). Birth or adoption: up to $5,000 per taxpayer within one year of the birth or finalized adoption; see the dedicated birth or adoption page. Disaster: up to $22,000 per disaster. Domestic abuse victim: the lesser of $10,300 for 2025 or 50% of the present value of the IRA. Emergency personal expense: one per calendar year, the lesser of $1,000 or your total interest in the IRA minus $1,000. Medical expenses: up to the amount by which qualifying unreimbursed medical expenses exceed 7.5% of AGI, and you need not itemize. Medical insurance while unemployed: premiums for you, your spouse and dependents, if you lost your job, received unemployment compensation for 12 consecutive weeks, and take the distribution in that year or the next and no later than 60 days after reemployment. Higher education: tuition, fees, books, supplies and equipment for you, your spouse, or the children or grandchildren of you or your spouse. College expenses paid from tax-free scholarships, Pell grants or employer assistance do not count.

Worked example

Dana, 41, takes a $12,000 taxable IRA withdrawal. She had $9,000 of unreimbursed medical bills and an AGI of $60,000. The medical floor is 7.5% × $60,000 = $4,500, so $9,000 − $4,500 = $4,500 of the distribution is exempt. The other $7,500 is subject to the 10% additional tax, which is $750. If the same $12,000 were a first-home withdrawal and Dana had never used the exception, $10,000 would be exempt and only $2,000 would face the tax, a $200 charge. Run those inputs in the calculator to see the split.

What to do on the return

Report the distribution on Form 1040 as shown on Form 1099-R, then use Form 5329 to claim the exception number that fits. Keep the paperwork: the physician’s certification, closing statements for a first home, tuition bills, the 1099-R. If you are unsure which exception fits, the publication’s own list is the authority, and a tax professional can confirm how it applies. Related reading: the age 59½ rule.

Sources

• IRS Publication 590-B, Distributions from Individual Retirement Arrangements (IRAs) (2025): Early Distributions, Exceptions (unreimbursed medical expenses, medical insurance, disabled, beneficiary, terminally ill, corrective distributions, substantially equal periodic payments, higher education, first home, reservist, birth or adoption, domestic abuse, emergency personal expense). Read November 2, 2026.

Edition read: Publication 590-B (2025), for use in preparing 2025 returns. Dollar limits and dates in this publication are for 2025; check the current publication and form instructions for your tax year. This page summarizes the publication and does not replace it.