4 Ways to Avoid IRA Early Withdrawal Penalties

In a perfect world, pre-retirees would never have a need to dip into their IRA savings.

However, if special and unforeseen circumstances arise and one needs to dig into an IRA nest egg, U.S. News and World Report offers some ways to avoid the penalty for making an early withdrawal.

Medical Expenses. If you spend more than 7.5% of their income on unreimbursed medical expenses, you can use an IRA withdrawal to pay for health care above that amount.

Health Insurance. Workers who receive unemployment benefits for 12 consecutive weeks can use their IRA to pay for health insurance. Only distributions received during the year unemployment benefits were received or the year following are exempt from the penalty.

Annuity Payments. If early distributions are part of a series of payouts, and the distribution method is approved by the IRS, they can be taken without penalty. At least one withdrawal must be taken annually, and you must take distributions for five years or until you turn 59 ½. Payment amounts can be calculated based on a portion of the account balance, however.

Disability. If you become disabled before you turn 59 ½ and cannot work, you can take distributions without paying the penalty.