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You need to consider potential penalty taxes for early distributions and distributions of less than the required amount when making your distribution choice.

Most retirement accounts allow you to begin withdrawing money, without penalty, after age 59½. But, there is a 10% penalty tax on withdrawals made before age 59½ (if you don't roll it over) from any retirement account, unless the distribution is made under one of the limited circumstances allowed by law (see below); i.e., there is a penalty for taking your money too soon. Consult your tax professional if you are under age 59½ and you are considering taking any distributions from your retirement plans.

Some Exceptions to the 10% Early Withdrawal Penalty before Age 59½

The 10% penalty doesn't apply to these situations:

• Distributions made after you separate from service during or after the year in which you reach age 55. But beware: This rule doesn't apply to IRAs.
• Distributions that you roll over to another qualified plan, tax sheltered annuity, or IRA within 60 days.
• Distributions made due to disability or after the employee's death.
• Distributions for qualified medical expenses that exceed 10% of adjusted gross income in 2020.(7.5% in 2019)
• Distributions after separation from service that are part of a scheduled series of substantially equal periodic payments. The separation from service requirement does not apply to IRAs.
• Distributions from an IRA to pay for qualified higher education expenses.
• Distributions from an IRA to qualified first-time homebuyers up to a $10,000 lifetime limit.