If you are under 59 1/2 years old, you will pay a 10% early withdrawal penalty unless you qualify for one of the exceptions:
- Death, or total and permanent disability
- Qualified Domestic Relations Order
- Series of substantially equal periodic payments based on life expectancy
- Dividend pass through from an ESOP
- IRS levy
- Unreimbursed medical expenses that are more than a certain amount of your adjusted gross income
- Certain distributions to qualified military reservists called to active duty
- Separation from Service if age requirement is met
Paying off a mortgage is not an itemized deduction on Schedule A. Any interest paid in the tax year prior to the payoff would still be deductible on Schedule A.
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