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The Curious Bag
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You are allowed to cash out your Individual Retirement Account (IRA) at any time. You may have to pay taxes and penalties on the amount you withdraw, however.
Qualified Distributions
To cash out money penalty-free from your IRA, you must be at least 59 1/2 years old and, if it is a Roth IRA, the account must have been open for five years.
Age Exceptions
If you are not 59 1/2, you may still be able to withdraw the money penalty-free if you have a special exception, such as using up to $10,000 for a first-time home purchase or medical expenses that exceed 7.5 percent of your adjusted gross income.
Roth IRA Contributions
You can withdraw Roth IRA contributions, but not the earnings on those contributions, at any time without having to pay an early withdrawal penalty.
Penalties
If your distribution from your IRA is not qualified, you have to pay a 10 percent penalty on the amount withdrawn in addition to any taxes you may owe.
Tax Implications
Money withdrawn from traditional IRAs must be included in your taxable income, even if it is a qualified withdrawal. Contributions to a Roth IRA and qualified distributions of earnings are tax-free.
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