In most cases, if you take funds out of your retirement plan before you reach the age of 59½, you will have to pay an additional tax of 10 percent on the withdrawn money. However, there are a few exceptions.
First, if you take your withdrawal as part of a substantially equal periodic payment plan, or SEPP plan, it isn’t taxable. A SEPP plan requires you to withdraw the same amount of money on a regular basis, at least annually. The IRS doesn’t want SEPP plans to be a way for people to get temporary, penalty-free access to retirement funds, so it requires the plan to last either five years or until age 59½, whichever comes last.
There are some other exceptions, including for people with disabilities, first-time home buyers, and unemployed people who are paying certain medical insurance premiums.
