How you can take money out of your IRA without paying a penalty

As its name suggests, an individual retirement account (IRA) is intended to provide income after you stop working. To encourage participation, IRAs come with certain tax advantages. With a Roth IRA, for example, contributions are made with after-tax dollars, so your money grows tax-free and qualified withdrawals are not taxed, either.

The IRS also put certain guardrails in place to discourage savers from accessing funds too early. With a traditional IRA, for example, if you make a withdrawal before you turn 59½, you'll be hit with a 10% penalty and have to pay federal income tax on the money. You can withdraw contributions to a Roth IRA anytime without penalty, but touching the investment earnings will trigger the 10% fine.

There are some exceptions that allow you to take money from an IRA without the 10% penalty, mostly financial hardship. You'll still have to pay taxes, but the sting is less painful.

Here are some of the chief exceptions to the early-withdrawal penalty. For the full list, visit IRS.gov.

If you're a first-time homebuyer — meaning you haven't bought a house in the past two years — you can withdraw up to $10,000 from an IRA without penalty. The money must be used for a down payment, closing costs, or other expenses directly related to a home purchase, and it must be used within 120 days of withdrawal.

You can also use the funds to help a child, grandchild or parent buy a home.

Qualified higher education expenses — including tuition, room and board, books and supplies — are considered an exemption to the IRA penalty for students attending at least half-time. The money can be used to pay for your own education, or that of your spouse, children, grandchildren or great-grandchildren.

The withdrawal can't exceed the recipient's educational expenses for the year and it could reduce the amount of need-based financial aid they receive.

If you don't have health insurance or have out-of-pocket medical expenses that are not covered by your policy, you can withdraw funds from an IRA to pay for them.

Your unreimbursed medical bills must collectively add up to more than 10% of your adjusted gross income and must be paid the same year you make your withdrawal.

You can also tap your IRA if you are unemployed and need the money to pay your health insurance premiums. To qualify for this exemption, you must be unemployed for at least 12 weeks.

Up to $5,000 per parent can be withdrawn from an IRA penalty-free during the one-year period beginning the day the child is born or legally adopted.

You can withdraw from your IRA without paying the 10% penalty if you are totally and permanently disabled. According to the IRS, that means you can provide a physician's certification that you are unable to do "substantial gainful work" for at least 12 months because of an ongoing physical or mental condition.

Individuals who sustain an economic loss because of a federally declared disaster in their region can withdraw up to $22,000 without being hit with the penalty.

If you are the survivor of domestic abuse by a spouse or partner and need funds to live on, you can take out up to $10,000 or 50% of the account balance, whichever is less.

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