Will I be exempt from IRS penalties on early withdrawals from my Later Account?

Article author
Nick
  • Updated

There are tax implications (generally a 10% penalty and possibly income taxes and other penalties) for early withdrawals from an IRA, but sometimes the IRS will waive a tax penalty for early withdrawals. We’ve listed some of the exceptions below. The IRS also talks about this here. Please talk to a tax specialist before making any decisions.

Qualified Reservist Distributions (QRDs) - These are for military members who were called into active duty from the reserves for over 180 days.

Disability - The IRS defines disability as “total and permanent disability of the IRA owner.” To qualify for this exemption, your condition must prevent you from working.

Death - Please contact us if you are the beneficiary or trustee of an Acorns Later account. Legal documents may be required.

Education - IRA funds may sometimes be withdrawn without tax penalty for higher education expenses. Talk to a tax specialist about your options.

Medical - The IRS splits medical exemptions into two categories: unreimbursed medical expenses and medical insurance if you are unemployed.

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