What types of early distributions are not subject to the 10 percent penalty tax?

You can make tax-free and penalty-free early distributions from a Roth IRA up to the total amount of your annual contributions—at any time and for any reason. But the earnings will be subject to tax and a 10 percent penalty tax unless you qualify for a penalty tax exception. The pretax portion of Traditional IRA distributions are subject to income tax and the 10 percent penalty tax unless a penalty tax exception applies.

There are several ways you can avoid the 10 percent early distribution penalty tax on IRA distributions. The penalty tax does not apply if your distribution is taken for any of the following reasons (subject to certain restrictions).

• Distributions taken by IRA owners age 59½ or older
• Payments to beneficiaries after an IRA owner’s death
• Disability (permanently disabled under the IRS definition)
• First-time homebuyer expenses
• Unreimbursed medical expenses that exceed a certain amount of income
• Health insurance premiums during unemployment
• Qualified higher education expenses
• IRS levy
• Substantially equal periodic payments
• Qualified reservist distributions
• Qualified birth or adoption distributions
• Distributions taken to provide relief for certain qualified federally declared disasters
• Distributions taken by a terminally-ill individual
• Distributions taken by domestic abuse victims (beginning in 2024)
• Distributions taken to pay certain emergency expenses (beginning in 2024)