One of the biggest fears of those contributing to an IRA is that they will run into a desperate need for cash and have to withdraw money from their IRA or Retirement Plan. Why? Because of the 10% penalty on top of having to pay taxes on the money.
However, there are several IRA withdrawal penalty exceptions that may be able to help you out in a real emergency. One that many people have used in the last couple years is the unemployed exemption. If you are unemployed for more than 12 weeks, you can use money from your qualified plan to pay health insurance premiums without being penalized. This is a huge benefit since health insurance can be very expensive if you are buying it through COBRA.
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