What is the earliest age you can withdraw from most retirement accounts without paying a penalty?

What is the earliest age you can withdraw from most retirement accounts without paying a penalty?

• A. 59 and 1/2
• B. 62
• C. 65
• D. 55

Answer: (A)

The key idea is the penalty for early withdrawals from retirement accounts. For most traditional retirement accounts, you’ll owe a 10% early withdrawal penalty if you take money out before you reach age 59 1/2. At age 59 1/2, that penalty no longer applies, so you can withdraw without incurring the 10% penalty (though you may still owe ordinary income tax on the amount taken from traditional accounts). Roth accounts follow similar timing for penalty-free access to earnings, with separate rules about the 5-year holding period and tax treatment. So the earliest age you can withdraw without paying the early withdrawal penalty is 59 1/2.

The key idea is the penalty for early withdrawals from retirement accounts. For most traditional retirement accounts, you’ll owe a 10% early withdrawal penalty if you take money out before you reach age 59 1/2. At age 59 1/2, that penalty no longer applies, so you can withdraw without incurring the 10% penalty (though you may still owe ordinary income tax on the amount taken from traditional accounts). Roth accounts follow similar timing for penalty-free access to earnings, with separate rules about the 5-year holding period and tax treatment. So the earliest age you can withdraw without paying the early withdrawal penalty is 59 1/2.