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Certain distributions from an IRA that are used for expenses similar to those that may be eligible for hardship distributions from a retirement plan are exempt from the additional tax on early distributions.
A distribution from an IRA for higher education expenses or to finance a first-time home purchase is exempt from the early distribution tax. The reason you have supplied is not a valid exception to the 10% penalty for early distribution.
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Here are the IRS rules concerning exceptions to the early withdrawal penalties:
There are several exceptions to the age 59½ rule. Even if you receive a distribution before you are age 59½, you may not have to pay the 10% additional tax if you are in one of the following situations.
You have unreimbursed medical expenses that are more than 7.5% of your adjusted gross income.
The distributions are not more than the cost of your medical insurance.
You are disabled.
You are the beneficiary of a deceased IRA owner.
You are receiving distributions in the form of an annuity.
The distributions are not more than your qualified higher education expenses.
You use the distributions to buy, build, or rebuild a first home.
The distribution is due to an IRS levy of the qualified plan.
The distribution is a qualified reservist distribution.
Although the reason you have stated does not qualify for an eception any amounts that you can categorize into these exceptions will qualify that specific use of funds. In other words, if you withdrew $10,000 and are able to fit $4,000 into medical then only the remaining $6,000 would be subject to the 10% early withdrawal penalty.
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