• Suspending an IRA account may result in a 10 percent penalty.dollars image by peter Hires Images from Fotolia.com
  
  The money you save in your individual retirement account (IRA) is subject to tax preferences aimed at encouraging savings for old age. Suspending your IRA account or withdrawing partial funds prior to age 59-years-and-six-months, may result in a 10 percent early withdrawal penalty on the amount of distribution, as well as income tax assessment unless an exception can be applied.
  
  

Death or Disablement

• The 10 percent Early Withdrawal Penalty is waived when the IRA owner becomes disabled or deceased as detailed in IRS Code Section 72(m)(7).
  
  

Home Purchase

• The 10 percent Early Withdrawal Penalty is waived when funds are withdrawn to purchase a first-time home.
  
  

Higher Education

• The 10 percent Early Withdrawal Penalty is waived when funds are withdrawn to cover higher education costs.
  
  

Medical Expenses

• The 10 percent Early Withdrawal Penalty is waived when funds are withdrawn to cover medical expenses exceeding 7.5 percent of the IRA owner's adjusted gross income (AGI).
  
  

IRS Levy

• The 10 percent Early Withdrawal Penalty is waived when funds are withdrawn to pay an IRS levy against the IRA.
  
  

IRA Conversion

• The 10 percent Early Withdrawal Penalty is waived when funds are withdrawn from a Roth IRA that had been converted from a traditional IRA at least five years prior, and only if the withdrawal amount did not exceed the gross income resulting from the conversion.
  
  

Required Minimum Distribution

• If funds are not withdrawn by April 1 of the year succeeding the IRA owner's 70-year-and-six-month birthday, a 50 percent excise tax on the amount not distributed may be assessed, unless periodic distributions are made for the lifetime of the IRA owner.
  
  

Income Tax

• Income tax at the IRA owner's current tax bracket will be assessed unless the funds were withdrawn five tax-years after the contribution was made (a tax-year begins on April 15). In addition, the following qualified exceptions must apply:
  
  1. IRA owner is over age 59-years-and-six-months.
  
  2. IRA owner is deceased.
  
  3. IRA owner becomes disabled, as defined in IRS code Section 72(m)(7).
  
  4. IRA owner uses the funds to purchase a first-time primary home.