IRAs are intended as a savings plan to accumulate funds for retirement. Accordingly, section 72(t) of the Internal Revenue Code imposes a penalty on certain premature distributions. Generally, if you receive a distribution from your IRA before you reach age 59½, to the extent that such distribution will be taxable as ordinary income, it will also be subject to an additional 10% penalty tax. The additional 10% penalty tax does not apply when distributions are made:

• because of your total and permanent disability,
• because of your death,
• to the extent such distributions do not exceed the amount you pay for medical insurance during the taxable year if you have separated from employment, have received unemployment compensation for twelve consecutive weeks under any Federal or State unemployment compensation law (or would have received such compensation but for the fact you were self-employed) and your IRA distribution is made during the year such unemployment compensation is paid or the succeeding year,
• to the extent such distributions do not exceed the amount of the unreimbursed medical expenses you pay during the year that are in excess of 7.5% of your adjusted gross income for the year,
• which are part of a series of substantially equal periodic (not less frequently than annually) payments made for your life (or life expectancy) or the joint lives (or joint life expectancies) of you and your designated beneficiary,
• as part of a qualifying rollover distribution,
• as part of a transfer incident to a divorce,
• which are timely withdrawn excess contributions,
• to the extent such distributions do not exceed the amount of the qualified higher education expenses (as defined in section 72(t)(7) of the Code) you pay for eligible individuals during the year,
• which are qualified first-time home buyer distributions as defined in sections 72(t)(8) of the Code($10,000 lifetime maximum), or
• on account of an IRS tax levy for distribution after 1999.