Using funds form your IRA, whether a traditional plan or a Roth, can be a great way to cover some major expenses that you may incur through your lifetime. Just be aware of certain terms and conditions that apply when withdrawing.

Home Purchase

If you chose to withdraw funds from your traditional IRA before you’ve reached the age of 59 ½, or if you withdraw earnings from a Roth IRA, you can expect to be penalized at 10%. However, if you use the funds withdrawn to purchase your first home, the penalty is waived on up to $10,000 of the IRA money taken. The same is true if you use the money to buy a first home for your parents, grandparents, child or grandchild as well.

Education

Again, the standard 10% penalty is not applicable if the money you’ve withdrawn from your traditional IRA or earnings from a Roth IRA are used to pay for education expenses for any of the following relationships:

• Yourself
• Your spouse
• Dependent

It’s important to remember that the withdrawal will be counted as income and therefore be taxed as such.