What Early Distributions qualify as exempt from the 10% tax penalty?

If you receive a distribution from your IRA before you reach age 59 1/2 and the program is calculating the 10% penalty, you may qualify for an exception if:

• Separation form service after age 55- when the separation from service occurs in or after the year you reach age 55 
• Series of equal payments- payments must begin after separation from service
• Disability - You are considered disabled if you can furnish proof that you can’t do any substantial gainful activity because of your physical or mental condition
• Distributions due to death
• Unreimbursed medical expenses - up to the amount you paid for unreimbursed medical expenses during the year minus 7.5% of your adjusted gross income (AGI) for the year
• Made to alternate payee - Qualified retirement plan distributions made to an alternate payee under a qualified domestic relations order
• Unemployed Individuals- IRA distributions made to certain unemployed individuals for health insurance premiums. 
• Higher Education - IRA distributions made for qualified higher education expenses.
• First Time Homebuyer - IRA distributions made for the purchase of a first home, up to $10,000
• Qualified retirement plan distributions made due to an IRS levy
• Qualified distributions to reservists while serving on active duty for at least 180 days.
• Other:
  • Distributions incorrectly indicated as early distributions by code 1, J, or S in box 7 of Form 1099-R. Include on line 2 the amount you received when you were age 591/2 or older.
  • Distributions from a section 457 plan, which aren’t from a rollover from a qualified retirement plan.
  • Distributions from a plan maintained by an employer if:
    1. You separated from service by March 1, 1986;
    2. As of March 1, 1986, your entire interest was in pay status under a written election that provides a specific schedule for the distribution of your entire interest; and
    3. The distribution is being made under the written election
  • Distributions that are dividends paid with respect to stock described in section 404(k).
  • Distributions from annuity contracts to he extent that the distributions are allocable to the investment in the contract before August 14, 1982.
  • Distributions that are phased retirement annuity payments made to federal employees.
  • Permissible withdrawals under section 414(w).
  • Distributions that are qualified disaster distributions.
  • Coronavirus-related distributions.
  • Qualified birth or adoption distributions. Attach a statement that provides the name, age, and TIN of the child or eligible adoptee. 

If you qualify for any of the exceptions to the 10% penalty listed above, enter the amount that is exempt in the field for "Early Distributions that are not subject to 10% tax" under Part 1, and select the reason from the drop-down menu for the field "Select the reason for exemption."

For additional information you can go to Exceptions to Tax on Early Distributions.