Many investors are aware of the rules surrounding penalty-free withdrawals from IRA accounts for certain expenses such as college tuition, a first time home purchase or, in certain circumstances, medical expenses and health insurance. But did you know that it's possible to make penalty-free withdrawals from your IRA before age 59 ½ for retirement too?
It's called the 72(t) distribution rule or the "substantially equal periodic payments" provision. It allows investors to make early withdrawals from retirement accounts so long as they keep making withdrawals until they reach age 59 ½ or have been making them for five years, whichever comes later. For example, a 52-year-old would need to make withdrawals until age 59 ½. A 57-year-old would need to make them until age 62.
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