Selected Exceptions to the 10% Early Withdrawal Penalty: IRA and Workplace Plan Reference

By Eli Wright Published July 29, 2026 Updated October 9, 2026 9 min read

Educational information, not financial advice. How we research and review.

Taking money out of a retirement account before age 59 and a half can trigger a 10 percent additional tax on the portion includible in gross income, on top of ordinary income tax, unless an exception applies. Roth conversions can also have separate recapture rules, described in the rollover row. The exception list is not the same for an IRA as it is for a 401(k), so check which rules apply to the account that will make the distribution.

This is a selected reference, not an exhaustive list. The IRS already publishes a side-by-side exceptions table. This page combines selected rows with qualifications from the cited IRS topics, publications and notice, then gives you a checklist for deciding what to verify with the plan administrator or tax preparer.

The original full review was recorded on 31 July 2026. The September corrections and 9 October 2026 additions and claim review are documented below with their source scope. They preserve the original review record and do not claim an exhaustive legal certification of every situation.

How to read this

IRA means a traditional or Roth IRA, including SEP and SIMPLE IRAs unless noted.
Workplace plan means a qualified employer plan such as a 401(k) or 403(b).
Yes in both columns means the exception exists for either account type, subject to the row’s conditions. A plan may not offer a particular distribution option.
n/a is not the same as No. It means the concept does not apply to that account type at all, rather than applying and being unavailable.
The 10 percent additional tax is separate from ordinary income tax. An exception removes the 10 percent. It does not make the distribution tax free.

Two things to check before you read the table

Either one can mean the table does not apply to you at all, and neither is visible from a summary of the exceptions.

A governmental section 457(b) deferred compensation plan is generally not a qualified retirement plan for this purpose. Distributions from one are not subject to the 10 percent additional tax at all. The exception to the exception: amounts attributable to a direct transfer or rollover into it from a qualified plan or an IRA. Stated on Topic no. 558 and repeated in the exceptions table’s footnote.
If a SIMPLE IRA distribution is otherwise subject to the 10 percent additional tax, the rate increases to 25 percent within the first 2 years of participation. Qualifying exceptions still apply; the 25 percent additional tax does not apply to every early SIMPLE distribution. See the IRS SIMPLE IRA withdrawal and transfer rules, Additional taxes and Exceptions to additional taxes.

Selected exceptions and account rules

Exception	IRA	Workplace plan	Notes, limits and code section	Confirmed on
Reaching age 59 and a half	Yes	Yes	The baseline. Everything below is an exception to taking money out before this age. Section 72(t)(2)(A)(i)	Retirement topics: exceptions
Death of the account owner	Yes	Yes	Paid to a beneficiary or estate	Retirement topics: exceptions, Topic no. 557
Total and permanent disability	Yes	Yes	The definition is specific; see the cited page	Retirement topics: exceptions, Publication 590-B
Series of substantially equal periodic payments (SEPP, “72(t)”)	Yes	Yes	Must continue for a set period, and modifying early can apply the tax retroactively. For a qualified plan other than an IRA you must separate from service with that employer before the payments begin. Topic 557 points to Notice 2022-6 for the permitted payment methods	Retirement topics: exceptions, Topic no. 557, Topic no. 558, Publication 590-B
Unreimbursed medical expenses	Yes	Yes	Only the amount above a percentage-of-AGI floor, which applies whether or not you itemize deductions. The cited page carries the current floor	Retirement topics: exceptions, Topic no. 558
Health insurance premiums while unemployed	Yes	No	IRA only. After losing your job, receive federal or state unemployment compensation for 12 consecutive weeks. Take the distribution in the year you receive that compensation or the following year, and no later than 60 days after reemployment. The exception is limited to medical insurance premiums paid that year for you, your spouse and your dependents. Topic 557 also covers someone who would have qualified for unemployment compensation but for self-employment. Ordinary income tax can still apply	Topic no. 557, Publication 590-B
Qualified higher education expenses	Yes	No	IRA only	Retirement topics: exceptions
First-time home purchase	Yes	No	IRA only, and a lifetime limit applies. See the cited page for the amount	Retirement topics: exceptions, Publication 590-B
Separation from service in or after the year you turn 55 (“rule of 55”)	No	Yes	Workplace plan only. The exceptions table shows no in the IRA column, so money rolled into an IRA no longer has this exception. That consequence is read off the table rather than stated in IRS prose	Retirement topics: exceptions
Qualified public safety employees separating from service	No	Yes	Separation during or after the year the employee reaches age 50, or 25 years of service under the plan, whichever is earlier, from a governmental plan. The exceptions table’s footnote extends it to specified federal law enforcement officers, corrections officers, customs and border protection officers, federal firefighters, private-sector firefighters and air traffic controllers, and to the Thrift Savings Plan	Retirement topics: exceptions, Topic no. 558
Firefighters separating from service	n/a	Yes	Separation in or after the year they reach age 50, or 25 years of service, whichever is earlier, from plans described in clauses (iii), (iv) or (vi) of section 402(c)(8)(B). Topic 558 carries this as a bullet separate from the public safety row above	Topic no. 558
Distribution under a qualified domestic relations order (QDRO)	No	Yes	Workplace plan only. Topic 558 narrows it to an alternate payee who is the spouse or former spouse of the participant; the exceptions table says only alternate payee. The narrower wording is used here. An IRA split in divorce uses different rules	Retirement topics: exceptions, Topic no. 558
IRS levy on the account	Yes	Yes	The levy itself, not a voluntary withdrawal to pay a tax bill	Retirement topics: exceptions
Qualified reservist distribution	Yes	Yes	Called to active duty for a required period	Retirement topics: exceptions, Publication 590-B
Qualified birth or adoption distribution	Yes	Yes	A per-child limit applies and repayment may be permitted. Topic 558 specifies the plan side is a defined contribution plan	Retirement topics: exceptions, Topic no. 558, Publication 590-B
Qualified disaster recovery distribution	Yes	Yes	For an individual who sustained economic loss from a qualified federally declared disaster and whose principal place of abode was in the qualified disaster area at some time during the incident period. The distribution must fall within the applicable statutory window. See the cited guidance for the qualifying declaration, distribution window and limits	Retirement topics: exceptions, Topic no. 558, Publication 590-B
Terminally ill individual distribution	Yes	Yes	Topics 557 and 558 support the IRA and workplace-plan exception. Publication 590-B explains IRA eligibility: receive the distribution on or after physician certification of an illness or condition reasonably expected to result in death within 84 months after certification. The certificate must meet the prescribed requirements; an IRA owner who is a physician cannot certify their own terminal illness. The summary-table discrepancy recorded on 31 July 2026 remains visible: its entry cites section 401(k)(2)(B)(i)(I) and shows IRA n/a. The IRA Yes here follows the detailed Publication 590-B rule checked on 9 October 2026, not that summary cell	Topic no. 557, Topic no. 558, Publication 590-B
Emergency personal expense distribution	Yes	Yes	Frequency and amount limits apply; see the cited page	Retirement topics: exceptions
Domestic abuse victim distribution	Yes	Yes	For domestic abuse by a spouse or domestic partner. A limit applies. Confirmed for distributions made after 12/31/2023. Whether a particular plan offers it is not stated on any page read here, so confirm with your plan administrator	Retirement topics: exceptions, Topic no. 557, Topic no. 558
Qualified long-term care distribution	No	Yes, eligible defined contribution plans only	For distributions after December 29, 2025. The plan must elect to offer this option. The annual aggregate is limited to the least of certified long-term care insurance premiums paid by or assessed to the employee for the employee or spouse, 10% of the present value of the employee’s vested accrued benefit under the plan, or $2,600 for 2026 (indexed). The insurer must file the required long-term care premium statement with the plan after satisfying the issuer disclosure requirements. Spouse coverage does not qualify for this exception if the employee and spouse file separate returns. Generally included in income. Section 72(t)(2)(N)	Notice 2026-33
Corrective distribution of excess contributions	n/a	Yes	Plan side only: excess contributions, excess aggregate contributions and excess deferrals, and the earnings on them, distributed timely. Sections 401(k)(8)(D), 401(m)(7)(A), 402(g)(2)(C)	Retirement topics: exceptions
Returned IRA contribution (timely excess correction)	Yes	n/a	IRA only. For corrective distributions made on or after December 29, 2022, both the excess contribution and its attributable earnings are exempt from the 10 percent additional tax if returned by the tax return due date, including extensions. This does not make the earnings tax free: include them in income for the year the contribution was made. Do not deduct the returned contribution. Section 408(d)(4)	Publication 590-B, Publication 590-A
Automatic enrollment permissive withdrawal	Yes, SIMPLE IRA and SARSEP only	Yes	Section 414(w)(1)(B)	Retirement topics: exceptions, Topic no. 557, Topic no. 558
Pension-linked emergency savings account distribution	n/a	Yes	Applies to distributions made after 12/31/2023. Section 402A(e)(7)	Retirement topics: exceptions, Topic no. 558
Pre-1986 written election	n/a	Yes	A distribution from an employer plan under a written election providing a specific schedule for distribution of your entire interest, where as of 1 March 1986 you had separated from service and had begun receiving payments under the election. Carried only by Topic 558	Topic no. 558
Rollover completed within the allowed window	Yes	Yes	An eligible rollover usually defers income tax, but a conversion to a Roth IRA or designated Roth account generally includes previously untaxed amounts in income. An in-plan Roth rollover itself is not subject to the 10 percent additional tax. A later distribution of its taxable portion within 5 taxable years can trigger recapture of that tax unless an exception applies. The period begins January 1 of the rollover year. Rolling the amount onward to another designated Roth account or Roth IRA does not itself trigger recapture, but a subsequent distribution within that period can. An eligible distribution paid to you generally has a 60 day rollover deadline; extensions and special rules can apply. The one-rollover-per-12-month limit applies to indirect IRA-to-IRA rollovers, not Roth conversions or direct trustee transfers	Topic no. 557, Publication 590-A, Topic no. 413, Designated Roth account FAQs
Amounts excepted by federal legislation on certain emergencies and disasters	Yes	Not stated on the pages read; confirm with a tax professional	A catch-all carried by Topic 557 on the IRA side. The plan side was not covered by the pages read	Topic no. 557
ESOP dividends	n/a	Yes	Dividends paid on employer securities held in an ESOP	Retirement topics: exceptions
Phased retirement annuity payments	No	Yes	Certain federal phased retirement arrangements. Topic 558 points to Publication 721 for detail	Topic no. 558

Reporting, in both directions. If a distribution meets an exception but box 7 of Form 1099-R does not show one, the exception is claimed on Form 5329. The reverse is the more useful half and is easier to miss: you do not need to file Form 5329 for this additional tax when distribution code 1 is correctly shown in box 7 and you owe no other additional tax on a distribution. In that case you enter the tax on Schedule 2 (Form 1040) and tick the box indicating you are not required to file Form 5329. If you owe another additional tax on a distribution, use Form 5329. Confirmed on Topics 557 and 558, with the no-other-tax qualification in Publication 590-B’s Form 5329 not required section.

Hardship is not an exception. A 401(k) hardship distribution lets you take money out. It does not remove the 10 percent additional tax. The IRS hardship distributions page explains that taxable amounts remain subject to income tax and may also be subject to the 10 percent additional tax on early distributions. Qualifying for access alone does not establish eligibility for a penalty exception.

Long-term care: ask the plan before withdrawing. Notice 2026-33 covers eligible defined contribution plans, including 401(k) and 403(b) plans; it excludes IRAs. Governmental 457(b) plans can also offer these distributions, but their usual exemption from the 10 percent tax is described above. Under Q&A B-11, if a plan does not offer qualified long-term care distributions, using an otherwise permitted withdrawal to pay premiums does not qualify for this exception. Ask the insurer to file the premium statement with the participating plan and confirm the applicable limit before requesting a distribution. This is an exception for certified insurance coverage, not a general exemption for long-term care bills. Q&A B-5 also says there is no special three-year repayment right for this distribution.

Show your work: what was read, when, and what is deliberately absent

Verified 31 July 2026: original full-matrix review. Corrected 30 September 2026: the medical-insurance and returned IRA contribution rows were checked against Publication 590-B’s Medical insurance and corrective-distribution sections. Topic 557 confirms the self-employment provision; Publication 590-A explains the separate income-tax treatment of returned contributions and earnings. This focused correction does not renew the full-matrix review date. Added 9 October 2026: the qualified long-term care row and accompanying explanation were checked against Notice 2026-33, published 8 June 2026. This focused addition does not renew the full-matrix review date or establish an exhaustive list of exceptions. Corrected 9 October 2026: the rollover row’s income-tax distinction, in-plan Roth recapture rule and deadline qualifications were checked against Topic 413 and the designated Roth account FAQs; Publication 590-A’s rollover-limit section confirms the 12-month rule and its exclusions. This focused correction also leaves the original full-matrix review date unchanged. Claim review 9 October 2026: the account distinctions and surrounding reporting, governmental 457(b) and tax explanations were compared with the current exceptions table and Topics 557 and 558. Publication 590-B was used for IRA terminal-illness certification, the Form 5329 qualification, SEPP duration/recapture, the first-home lifetime limit, reservist timing and birth/adoption repayment, plus the disability definition and disaster residence/timing requirements. The SIMPLE IRA source’s Additional taxes and Exceptions sections support the conditional 25 percent rate; its other examples were not adopted. The hardship page and Topic 413 support the revised taxable-amount and plan-loan wording. This records the claims checked, not an exhaustive legal review or a change to the original July review stamp. Sources used across those reviews:

Publication 575 is not cited for this reference; plan-loan wording here uses Topic 413. Publication 590-B explicitly includes attributable earnings in the timely excess-correction exception for distributions from December 29, 2022 onward. Topic 557’s shorter returned-contribution bullet does not describe that earnings exception; the corrected row uses the more specific publication guidance.

How to use this synthesis. The IRS already publishes a side-by-side account table. This selected reference combines that table with qualifications from Topics 557 and 558, Publications 590-A and 590-B, the long-term care notice, Topic 413 and the designated Roth account FAQs. The checklist below helps turn a possible exception into questions about account type, plan access, evidence and reporting. It does not replace the IRS table or promise a complete list.

Annual figures need a year. The long-term care row states the 2026 limit verified in Notice 2026-33. Check the indexed limit for the year of a later distribution. Other dollar thresholds, percentage-of-AGI floors and contribution limits are left to their cited IRS pages. The percentages and periods that do appear, the 10 and 25 percent taxes, the 2 year SIMPLE IRA window, the 60 day rollover window, the age and service tests and the statutory dates, were each read on the pages above.

Revalidation cadence: quarterly, and every January. The 10 percent penalty exception list is the part of the code Congress keeps amending, and SECURE 2.0 provisions are still phasing in, so a verification stamp ages badly. This page is due for re-verification against its sources every three months, and again each January when annual changes land. The repository review check fails when run after the review due date; it cannot remove an already deployed page or change Google’s index. An editor must review the sources and record what was checked. The owner then decides whether to publish the reviewed update or withdraw the page through a new deployment. Withdrawal and search-index changes are not automatic.

This is general information, not tax advice. Whether an exception applies to a specific distribution depends on facts this page cannot see. Confirm with a tax professional before acting.

Related tool: the retirement calculator.

What this table does not tell you

Four things it deliberately leaves out, because getting them wrong is worse than not stating them:

All annual dollar limits and percentage floors. Most rows point to the IRS page carrying the applicable value. The long-term care row explicitly states the verified 2026 cap; do not carry that figure into a later tax year without checking the indexed amount.
Whether your specific plan offers it. Several of the newer exceptions are optional for employers. The exception can exist in law and still be unavailable in your plan. Your plan administrator, not the IRS page, answers that.
Your state. State tax treatment of an early distribution is separate and is not covered here. Which state is entitled to ask the question at all can itself be contested after a move, because domicile and residency are two different tests and a state can go on treating someone as its taxpayer well after they have physically left.
Whether your evidence meets the rule. The terminal-illness row now uses Publication 590-B’s detailed IRA guidance, including physician certification. This reference cannot decide whether a particular certificate or distribution satisfies the requirements.

A 401(k) loan has a separate set of requirements. IRS Topic 413 identifies a loan treated as a distribution because it fails requirements when made or later, such as upon default. That deemed distribution is generally ineligible for rollover. A plan loan offset, where the plan reduces the account balance to repay the loan, has separate rollover rules; a qualified plan loan offset can have a longer rollover deadline. Timely loan payments alone do not establish compliance with every loan requirement. The 401(k) loan guide explains repayment and offset distinctions.

A checklist before requesting a distribution

Identify the account and the money’s location. Write down whether this is an IRA, a workplace plan or a governmental 457(b), and whether money has already been rolled over. The rule of 55 is one reason that location matters.
Separate access from penalty relief. Ask the administrator which distribution option the plan actually offers. For qualified long-term care distributions, plan participation and the insurer’s premium statement are prerequisites; paying the same premium with another withdrawal does not substitute for them.
Match the facts to the cited rule. Record the distribution date, applicable tax-year limit and documents required for the particular exception. For the long-term care row, also check whose coverage is insured and whether spouses file separate returns.
Check the reporting separately. Keep the plan’s distribution record and Form 1099-R, and check whether Form 5329 is needed. Penalty relief and ordinary income tax are separate questions. A blank or unexpected reporting code is a reason to review the facts, not proof that an exception applies.

Where people get caught

Rolling a 401(k) into an IRA and then relying on the rule of 55. The rule of 55 is a workplace-plan exception. Once the money is in an IRA, it is gone.
Assuming education or first-home exceptions apply to a 401(k). They are IRA-only rows in the table above.
Treating a hardship withdrawal as penalty-free. Access and penalty relief are two different questions.
Modifying a SEPP schedule early. Stopping or changing the payments before the required period can apply the 10 percent retroactively to earlier payments.