The most useful exceptions to know
Permanent disability waives the penalty entirely. The 72t rule — also called SEPP — lets you take equal annual payments at any age without penalty, as long as you keep them up for at least five years or until 59½, whichever is longer. A first home purchase qualifies for up to $10,000 from an IRA, once in your lifetime. If you separate from your employer at age 55 or older, 401(k) distributions from that plan are penalty-free — but this doesn't apply to IRAs.
What does the 72t rule actually mean?
Section 72(t) of the tax code allows you to take substantially equal periodic payments from a retirement account without the 10% penalty, regardless of age. You calculate the payment using one of three IRS-approved methods, and you commit to that schedule. It's a useful option for early retirees who need bridge income before 59½.
The 72t election is difficult to undo once started — modifying the payments before the required period ends triggers the penalty retroactively on all previous distributions. Work through this one carefully with a CPA before starting.
Already past 73 and worried about required withdrawals? See our RMD calculator.