• Taking funds out of your IRA early can be a tax gamble.Jupiterimages/Comstock/Getty Images
  
  An individual retirement account, or IRA, is one of the best tools for saving for retirement. However, these accounts do carry penalties for early withdrawal. Income taxes and tax penalties can be a burden if you withdraw funds early, depending on the type of IRA you have. Exceptions also apply for both traditional and Roth IRAs.
  
  

Traditional IRA

• If you withdraw money from your traditional IRA before age 59 1/2, you will have to pay income taxes plus a 10 percent penalty to the IRS. There are exceptions to this rule, however.
  
  

Traditional IRA Exceptions

• Any of your beneficiaries can take funds out penalty free when you die. Should you become disabled, you can also take funds out without penalty. No penalties apply if you use the money for higher education, have medical expenses exceeding 7.5 percent of your adjusted gross income or if you're unemployed and need to pay for health insurance. Additionally, if you buy a home for the first time, you can use up to $10,000 of your IRA funds without tax penalty. In the case of an excess contribution you want to correct, you can do so without penalty if done before the contribution due date. You can also use the procedure called Substantially Equal Periodic Payments exception that can exempt you from a tax penalty as long as you take out payments equally over a period of your projected life expectancy. You can withdraw funds without penalty if you're older than 59 1/2.
  
  

Roth IRA

• The tax consequences of withdrawing Roth IRA funds early are slightly different from a traditional IRA. If you take non-qualified distributions out of your Roth IRA before the money has been in the account for at least five years, you'll have a 10 percent tax penalty as well as have to pay income tax. With a Roth IRA, however, qualified distributions permit you to take funds for certain purposes without either having to pay income taxes or dealing with a tax penalty.
  
  

Roth IRA Exceptions

• Qualified distributions available are similar to the traditional IRA. But you have to be over 59 1/2 in order to avoid early withdrawal penalties. Exceptions to this rule include death, disability or the purchase of your first home.