In 2010, the annual contribution limit to an IRA is $5,000, plus an additional $1,000 for those 50 or older. At age 59 1/2 you can take distributions from your IRA with no penalties, and the amount withdrawn is treated as ordinary income that year for income tax purposes.If you choose to take a distribution from your IRA prior to age 59 1/2, you will be assessed a 10 percent early withdrawal penalty.n 2010, the annual contribution limit to an IRA is $5,000, plus an additional $1,000 for those 50 or older. At age 59 1/2 you can take distributions from your IRA with no penalties, and the amount withdrawn is treated as ordinary income that year for income tax purposes.