Can I take money out of my IRA or 401k without a 10% penalty?

Yes, you can. However, that does not mean that you should. A lesser known provision of the Internal Revenue Code, specifically section 72t, allows for substantially equal periodic payments to be withdrawn from your tax-deferred account without a 10% penalty being charged. The rules surrounding this withdrawal method are complex and a tax professional, CPA, and/or an ERISA lawyer’s advice should be sought before implementing. Relatively minor mistakes can subject the entire withdrawal amount to the 10% tax penalty if you are not careful. Don’t forget that such a withdrawal comes at a great cost even if you avoid the 10% penalty; namely, your financial security in retirement because these funds are no longer compounding in value as you make your way to your golden years. Other less onerous possibilities may exist if you still need to access to your tax-deferred funds early. Talk to you financial advisor about possible “hardship” withdrawals or a 401k loan if your plan permits. Better yet, access your “rainy day” fund (i.e., a bank account with at least 6-12 months of living expenses set aside for life’s unexpected events) that all households should have for just such an emergency!