1. Permanent disability of IRA ownerMoney can be withdrawn without penalty in the event the IRA holder becomes permanently disabled.
2. Death of IRA ownerIt's small consolation, but if you kick-the-bucket before you're 59 1/2 years old, your estate won't be hit with the 10% early withdrawal fee.
3. Withdrawals are used to pay non-reimbursed medical expensesIn the event of serious illness or injury that requires prolonged or expensive medical treatment, Uncle Sam will waive the early withdrawal fee on the condition that the expenses are in excess of 7.5% of your adjusted gross income.
4. Withdrawals used to help pay for first-time home purchaseDespite a lifetime limit of $10,000, this exemption can make it much easier for an IRA owner to buy a house.
5. Higher education costsCollege can be expensive. Thankfully, certain higher education costs for you, your spouse, children or grandchildren can be withdrawn penalty-free. You may still owe federal income tax, however. For more information, read the Internal Revenue Service article Notice 97-60 Using IRA Withdrawals To Pay Higher Education Expenses.
6. Money is used to pay back taxes to the IRS after a levy has been placed against the IRAThis is not the kind of exemption for which you want to qualify, but it may save you money if you find yourself in an uncomfortable position with the IRS.
7. Withdrawals used to pay medical insurance premiumsOut of a job? The rest of the world may be topsy-turvy, but rest assured, you won't be penalized for using retirement money to pay your medical insurance as long as you have been on unemployment for longer than twelve weeks.
8. Made on or after the day the IRA owner turns 59 1/2Once you have reached the qualifying age of 59 1/2, you can make penalty-free regular withdrawals upon which to live.