Allowable exceptions to the 10% early (before age 59-1/2) withdrawal penalty are:
- Rollovers to another IRA (no tax due)
- Disability
- Medical costs exceeding 7-1/2% of AGI
- Separation from service at age 55 or older (pensions & 401K but not IRAs)
- Substantially equal periodic payments (SEPP)
- Military reservist called to active duty
- Public safety employees separated after age 50 (pensions & 401K but not IRAs)
- IRS levy
- Education expenses (Only IRAs; not available for withdrawals from 401k plans)
- Court ordered spousal payments (pensions & 401K but not IRAs)
- First time home buyer (up to $10K) (Only IRAs; not available for withdrawals from 401k plans). The IRS defines a first time home buyer as someone who had no interest in a primary home for 2 years prior to the date of closing on the home. This requirement also includes your spouse.
- Made to a beneficiary or estate on account of the IRA owner's death
- Unemployed Medical Insurance
- Age 59-1/2
- See the instructions for form 5329, for some other obscure exceptions http://www.irs.gov/pub/irs-pdf/i5329.pdf
Reference: https://www.irs.gov/pub/irs-pdf/p590b.pdf
