The basic steps to withdraw from your IRA

To withdraw money from your IRA, you contact your IRA provider — the bank, brokerage, or investment company holding your account — and request a withdrawal. They will ask which account the money comes from, how much you want, and where to send it. The money typically arrives in your bank account within three to five business days. The provider will also send you a tax form showing how much you withdrew, which you report on your tax return.

The process itself is straightforward. The complexity comes from the rules about when you can withdraw without penalty and how much you owe in taxes. Those rules differ sharply depending on your age and the type of IRA you have.

Key Takeaways

  • You can withdraw from a Traditional IRA at any age, but withdrawals before 59½ usually trigger a 10 percent penalty plus income tax unless an exception applies.
  • Roth IRA withdrawals work differently: you can take out your contributions anytime tax-free, but earnings have age and holding-period rules.
  • After age 73, you must take a minimum withdrawal each year from a Traditional IRA, calculated based on your age and account balance.
  • Your IRA provider will withhold taxes from your withdrawal unless you tell them not to, and you may owe more tax when you file your return.

Withdrawals from a Traditional IRA before age 59½

If you withdraw from a Traditional IRA before you turn 59½, you will owe income tax on the full amount withdrawn. You will also owe a 10 percent early withdrawal penalty on top of that tax — unless one of the IRS exceptions applies to your situation.

The exceptions are specific. You can withdraw without the 10 percent penalty if you are disabled, if you are a first-time homebuyer taking out up to $10,000 lifetime, if you have significant medical expenses, if you are unemployed and paying for health insurance, or if you are taking substantially equal periodic payments (a complex calculation that locks you into regular withdrawals for five years or until age 59½, whichever is longer). You still owe income tax on the withdrawal even when an exception applies — the penalty is what you avoid.

If none of these exceptions fit your situation, the 10 percent penalty plus income tax makes early withdrawal expensive. A $10,000 withdrawal might net you $7,000 or less after taxes and penalty, depending on your tax bracket.

Withdrawals from a Traditional IRA at age 59½ and later

Once you reach 59½, you can withdraw from your Traditional IRA without the 10 percent penalty. You still owe income tax on the withdrawal — that does not change — but the penalty goes away. You can withdraw as much or as little as you want, whenever you want.

This is the point where many people begin taking retirement income from their IRAs. Some withdraw a set amount each month or year. Others take withdrawals only when they need the money. The choice is yours, with one exception: after age 73, the IRS requires you to take a minimum withdrawal each year.

Required minimum distributions after age 73

Starting in the year you turn 73, you must withdraw a minimum amount from your Traditional IRA each calendar year. This amount is calculated by dividing your account balance on December 31 of the previous year by a life expectancy factor published by the IRS. Your IRA provider can calculate this for you, or you can find the IRS worksheets online.

If you do not take the required minimum distribution, the IRS charges a penalty equal to 25 percent of the amount you should have withdrawn (reduced to 10 percent if you correct it within two years). This is a steep penalty, so most people set a calendar reminder in October or November to request their distribution before the December 31 important date.

If you have multiple IRAs, you calculate the required minimum distribution for each one separately, but you can take the total amount from just one account if you prefer. This flexibility can help you manage which accounts you draw from.

How Roth IRA withdrawals work differently

A Roth IRA has different rules because you already paid taxes on the money you put in. You can withdraw your contributions (the money you deposited) at any time, at any age, with no tax or penalty. The earnings (the investment growth) are what have restrictions.

You can withdraw Roth earnings without penalty only after you turn 59½ and the account has been open for at least five tax years. If you withdraw earnings before meeting both conditions, you owe income tax on the earnings plus a 10 percent penalty — the same penalty as a Traditional IRA early withdrawal. The five-year rule applies to all your Roth IRAs combined, so opening a second Roth does not restart the clock.

Because you can access your contributions anytime, some people use a Roth IRA as a backup emergency fund. Just remember that once you withdraw a contribution, you cannot put that money back in the same year — you can only contribute new money up to your annual limit.

What happens to taxes when you withdraw

When you request a withdrawal, your IRA provider will ask whether you want them to withhold taxes. If you say yes, they will send you less money and send the withheld amount to the IRS. The standard withholding is 10 percent for most withdrawals, though you can request more or less.

Withholding is not the same as paying your full tax bill. It is just money set aside. When you file your tax return, your actual tax on the withdrawal is calculated based on your total income for the year and your tax bracket. You might owe more tax than was withheld, or you might get a refund if too much was withheld.

If you choose not to have taxes withheld, you will receive the full amount, but you are responsible for setting aside money to pay the tax bill when you file. Many people underestimate this and face a surprise bill in April. If you are unsure, ask your tax preparer or the IRA provider's customer service how much to expect to owe.

Rolling over or transferring your IRA to another provider

If you want to move your IRA to a different bank or brokerage, you have two options: a direct transfer or a rollover. A direct transfer is cleaner — your current provider sends the money directly to the new provider, and you never touch it. No taxes are withheld, and there are no time limits or restrictions.

A rollover means you withdraw the money yourself and deposit it into the new IRA within 60 days. Your current provider will withhold 20 percent for taxes, even though this is not a taxable event if you complete the rollover on time. You can only do one rollover per IRA per year, and if you miss the 60-day important date, the withdrawal becomes taxable and subject to penalties if you are under 59½.

For most people, a direct transfer is simpler and safer. Ask your new provider to initiate it — they handle the paperwork with your old provider.

Frequently Asked Questions

Can I withdraw from my IRA if I lose my job?

You can withdraw at any time, but if you are under 59½, you will owe the 10 percent penalty and income tax unless an exception applies. Unemployment itself is not an exception, but if you are using the withdrawal to pay health insurance premiums while unemployed, that exception may cover you. Check with a tax preparer about your specific situation.

What if I need money but do not want to pay the penalty?

If you are under 59½ and do not may have access to for an exception, you could take a loan from your 401(k) if you have one — IRAs do not allow loans. You could also explore a Roth conversion ladder, which is complex and requires planning. A financial advisor or tax preparer can discuss whether either option makes sense for you.

Do I have to take my required minimum distribution all at once?

No. You can take it in monthly payments, quarterly payments, or any schedule you choose — as long as the total for the year meets the minimum by December 31. Some people spread it out to manage their tax bracket; others take it all at once. Your provider can help you set up a regular payment schedule.

What if I inherited an IRA from someone else?

Inherited IRA rules are complex and depend on your relationship to the person who died and when they died. You may be required to withdraw the entire balance within ten years, or you may have different options. Contact the IRA provider or a tax preparer when ready — the rules changed recently and missing important date carries steep penalties.

Can I put money back into my IRA after I withdraw it?

Only if you complete a rollover within 60 days, and only once per year per IRA. Otherwise, you can contribute new money up to the annual limit set by the IRS, which changes each year. You cannot "replace" a withdrawal by contributing extra — contributions and withdrawals are separate transactions.