In most cases, if you take funds out of your retirement plan before you reach the age of 59陆, you will have to pay an additional tax of 10 percent on the withdrawn money. However, there are a few exceptions.
First, if you take your withdrawal as part of a substantially equal periodic payment plan, or SEPP plan, it isn鈥檛 taxable. A SEPP plan requires you to withdraw the same amount of money on a regular basis, at least annually. The IRS doesn鈥檛 want SEPP plans to be a way for people to get temporary, penalty-free access to retirement funds, so it requires the plan to last either five years or until age 59陆, whichever comes last.
There are some other exceptions, including for people with disabilities, first-time home buyers, and unemployed people who are paying certain medical insurance premiums.
