Questions & Answers

Are withdrawals from Individual Retirement Accounts (IRAs) taxable?

Distributions from an IRA are NOT taxable if the payments meet either of the following characteristics:

  • You received the distribution (including lump-sum distributions) on or after reaching the age of 59 1/2, or
  • The distribution was paid to the estate, or designated beneficiary, of the participant due to the participant's death.
Distributions you receive before age 59 1/2, even if you're retired, are taxable even if you don't pay a federal penalty for an early withdrawal. Distributions from an IRA, including a federal Roth IRA, are taxable to the extent the distribution exceeds your previously taxed contributions. Under the cost recovery method, the taxpayer is required to remove his contributions first and then the untaxed portions.

Pennsylvania law doesn't have any exceptions similar to the federal exceptions for withdrawal before age 59 1/2.

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