Question

Which of the following is an exception to the 10 percent early withdrawal penalty of a traditional IRA?

1) Distributions made after reaching age 59 1/2
2) Distributions made for qualified higher education expenses
3) Distributions made for first-time homebuyers
4) Distributions made for medical expenses exceeding 10 percent of adjusted gross income

Answer 1

Specific exceptions to the traditional IRA 10 percent early withdrawal penalty include reaching age 59 1/2, paying for qualified higher education expenses, purchasing a first home, and covering medical expenses exceeding 10 percent of adjusted gross income.

Step-by-step explanation:

When it comes to a traditional IRA, there are specific conditions under which the 10 percent early withdrawal penalty does not apply. These exceptions include:

1. Distributions made after reaching age 59 1/2.
2. Distributions made for qualified higher education expenses.
3. Distributions made for first-time homebuyers.
4. Distributions made for medical expenses exceeding 10 percent of adjusted gross income.

All these exceptions allow individuals to withdraw funds from their traditional IRA prior to the standard retirement age without incurring the typical early withdrawal penalty.