Northwestern Mutual
< Back to Insights & Ideas

Ask the Retirement Expert: Can I Take Distributions From My IRA Before Age 59½?

Angela DiCastri, MBA, CLU® •  June 10, 2016 | Enjoying Retirement, Ask the Expert, Your Finances

By Angela DiCastri, MBA, CLU®

Angela is the Director, Retirement Market, Planning and Sales. Under her leadership, the department is responsible for the growth and development of the retirement market, sales and adoption strategies, and the execution of plans that align with both the markets needs and the Company’s product development efforts.

Each week our Northwestern Mutual retirement experts answer your questions. This week’s question:

Can I take distributions from my IRA before age 59½?

Yes. And you can do it without paying the 10 percent penalty you may have heard of.

But it’s important to think about why you want to take early distributions. Common reasons include retiring early and for tax purposes (spreading out distributions allows you to take out smaller amounts each year, which could help you manage tax liability better than waiting until you are required to take distributions).

If you take withdrawals from your IRA prior to age 59½, section 72(t) of the Internal Revenue Code applies a 10 percent additional tax to the distribution. An exception to the additional tax is available if you take distributions in substantially equal payments over your life expectancy. The IRS allows you to use one of three methods to determine the withdrawal schedule that will avoid the 10 percent additional tax. You can learn more here.

However, these strategies are very complicated; and if you do it wrong, you could wind up paying a hefty tax bill and penalties, so it’s best to work with a financial and tax professional.

Do you have a question for our Northwestern Mutual retirement experts? Click here to send your questions.

Rate This Article