when you receive distributions from a traditional ira the irs treats the money as ordinary income and subjects it to income tax account holders can take distributions as early as age 59 11
the age for required minimum distributions rmds from traditional iras depends on your age and when you were born you must begin taking distributions by april 1 the year after you turn funds that are withdrawn before age 59 incur a 10 penalty of the amount withdrawn and taxes at standard income tax rates there are exceptions to these penalties for certain situations these include the following an individual needs to check with a tax attorney or the irs to be sure that the particulars of their situation qualify for a waiver of the 10 penalty 16traditional iras vs other ira typesother variations of the ira include the roth ira simple ira and sep ira the last two are employer generated but individuals can set up a roth ira if they meet the income limitations these individual accounts can be created through a broker you can check out some of the best options with investopedia s list of the best brokers for iras unlike a traditional ira roth ira contributions are not tax deductible and qualified distributions are tax free this means you contribute to a roth ira using after tax dollars but as the account grows you do not face any taxes on investment gains because you paid taxes on your contributions you can actually withdraw them penalty free at any time however you cannot withdraw earnings until age 59 without being subject to the 10 early withdrawal penalty 