Are there exceptions to the 10% penalty for receiving the IRA account distribution before reaching 60 years of age?

Yes. The penalty does not apply if the distribution is made:

• as a result of the death or disability due to a severe, chronic, degenerative, and terminal disease of the individual or any relative up to the fourth degree of consanguinity or second degree of affinity.
• due to the individual’s unemployment (as defined by the Code),
• because the individual will use the distributed amount to pay certain expenses of their direct dependents in regard to college tuition,
• for the purchase or construction in Puerto Rico of the individual’s first principal residence,
• for the repair or rebuilding of their principal residence after it was affected by fire, hurricanes, earthquakes, or any other unforeseen cause,
• up to $1,200 if used to purchase a computer for a dependent to the second degree of consanguinity who is studying, up to college level, and has not made that type of withdrawal in 6 years.

In addition to the above, the 10% penalty will not apply if the distributed amount is transferred by the individual to another IRA account in a rollover contribution within the sixty (60) days upon the receipt by the individual of the distribution or if the distribution is not included in the gross income in any way. Generally, the 10% penalty will be withheld from a distribution unless the individual provides satisfactory evidence to the trustee of compliance with the legal requirements to qualify for the exception.