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How much of an early distribution can I take from my IRA without having to pay the 10% penalty?

Unless you qualify for a retirement-plan early-distribution penalty exception, you must pay the 10% additional tax for IRA amounts you withdrew before age 59 1/2. You’ll claim the exception on form 5329.

Form 5329 exceptions and their codes for IRAs are:

  • 02 -- Distributions made as part of a series of substantially equal periodic payments -- made at least annually. These distributions must be for:
    • Your life or life expectancy
    • The joint lives or joint life expectancies of you and your designated beneficiary

If the distributions are from an employer plan, payments must begin after separation from service.

  • 03 -- Distributions due to total and permanent disability
  • 04 -- Distributions due to death. This doesn’t apply to modified endowment contracts.
  • 05 -- Qualified retirement plan distributions that:
    • Were used to pay deductible unreimbursed medical expenses
    • Exceed 10% of your adjusted gross income (AGI)

You don’t have to itemize your deductions to claim the exception.

  • 07 -- IRA distributions made to individuals who were on unemployment compensation for 12 consecutive weeks to pay for health insurance premiums
  • 08 -- IRA distributions made for higher-education expenses
  • 09 -- IRA distributions made to purchase your first home, up to $10,000
  • 10 -- Distributions due to an IRS levy on the qualified retirement plan or IRA account
  • 11 -- Qualified distributions to reservists while serving on active duty for at least 180 days
  • 12 -- Other -- see Form 5329 instructions. Also, use this code if more than one exception applies.

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So how much will you get (or owe) this year? That’s the million-dollar question. We happen to have three very useful calculators to help you estimate your refund or balance due.

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