al ▁not ▁needed ▁for ▁sp ending ▁has ▁lost ▁its ▁tax ▁shelter ▁on ▁future ▁growth . ▁ ▁In ▁addition ▁to ▁the ▁contribution ▁being ▁included ▁as ▁tax able ▁income , ▁the ▁I RS ▁will ▁also ▁assess ▁a ▁ 1 0 % ▁early ▁withdraw al ▁penalty ▁if ▁the ▁particip ant ▁is ▁under ▁age ▁ 5 9 ½ . ▁The ▁I RS ▁will ▁wa ive ▁this ▁penalty ▁with ▁some ▁exceptions , ▁including ▁first ▁time ▁home ▁purchase ▁( up ▁to ▁$ 1 0 , 0 0 0 ), ▁higher ▁education ▁exp enses , ▁death , ▁dis ability , ▁un - re imb urs ed ▁medical ▁exp enses , ▁health ▁ins urance , ▁ann u ity ▁pay ments ▁and ▁pay ments ▁of ▁I RS ▁lev ies , ▁all ▁of ▁which ▁must ▁meet ▁certain ▁st ip ulations . ▁ ▁The ▁recognition ▁of ▁tax able ▁income ▁in ▁ret irement ▁instead ▁of ▁when ▁working ▁may ▁affect ▁a ▁person ' s ▁qual ification ▁for ▁government ▁benefits ▁that ▁are ▁income - test ed . ▁The ▁loss ▁of ▁these ▁benefits ▁can ▁be ▁evaluated ▁by ▁including ▁them ▁in ▁the ▁calculation ▁of ▁the ▁tax ▁rate ▁on ▁withdraw als . ▁ ▁In come ▁limits ▁All ▁United ▁States ▁tax pay ers ▁can ▁make ▁I RA ▁depos its ▁and ▁de fer ▁the ▁tax ation ▁of ▁ear nings . ▁However , ▁as ▁explained ▁below , ▁the ▁depos its ▁are ▁not ▁ded uct ible ▁from ▁income ▁under ▁certain ▁circumstances . ▁According ly , ▁traditional ▁IR As ▁are ▁sometimes ▁referred ▁to ▁as ▁either ▁" ded uct ible " ▁or ▁" non - ded