Planning & Education | Distributions After Age 59½

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Distributions After Age 59½

After you reach age 59½, you can take money out of a Traditional, Rollover IRA or SEP-IRA whenever you want for any reason without any early distribution tax penalty. However, you must pay ordinary income tax on any tax-deductible contributions you previously made and on all accumulated earnings that are included in your distribution.

If you're age 59½ and you've owned a Roth IRA for at least five years, you can withdraw funds tax-free. If you've owned a Roth IRA for less than five years, you will pay income taxes on the earnings, but no penalty tax.

If you withdraw conversion amounts within five years, you'll owe the 10% penalty tax unless you meet one of the exceptions listed in the box below.

Exceptions to the 10% Early Distribution Penalty Tax

Under Section 72(t) of the Internal Revenue Code, you can avoid the 10% penalty tax that applies to early distributions from an IRA if you:

Die or become disabled.
Reach age 59½.
Use the distribution for qualified higher education expenses such as tuition for you or your dependents.
Use the distribution for a first-time home purchase ($10,000 lifetime limit).
Use the distribution for deductible medical expenses, or to pay medical insurance premiums while you are unemployed.
Use the distribution for an IRS levy on the IRA.
Take the distribution in a series of substantially equal annual payments for five years or until age 59½, whichever comes later.
Take the distribution as a timely removal of an excess contribution.

Please contact your tax advisor before making any distribution decisions.

Next: Required Minimum Distributions At Age 70½

Investors should consider the investment objectives, risks, charges, and expenses of a fund carefully before investing. Download a prospectus that contains this and other information about a fund, and read it carefully before investing.