Can you borrow against either a ROTH or Standard IRA? If not, can you make withdrawals prior to age 59 1/2 without penalties?

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There are a number of exceptions to the 10% penalty for distributions before age 59 1/2. One of these exceptions is for substantially equal periodic payments.

I wrote an article on this subject, which is scheduled to appear in the December 1999 issue of Estate Planning.

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Bruce Steiner, attorney
(212) 986-6000 (NY office)
(201) 862-1080 (NJ office)
also admitted in FL

You may not borrow against your IRA - that is a prohibited transaction which basically blows your whole IRA out of the "tax advantaged pool."

You may take your own Roth IRA contributions out without tax or penalty but then you lose the wonderful potential for tax-free, compounding growth for retirement.

You can avoid penalties on premature distributions from either type of IRA if you use the money for qualified education expenses, first-time home purchase, disability, certain medical expenses or health insurance for unemployed in addition to the "substantially equal periodic payments no less frequently than annually" which must continue until the later of the day you turn 59 1/2 or five full years have passed. I would speak with an accountant if any of these seem like they might fit your situation.