Core Insights - The article discusses various scenarios under which individuals can make penalty-free withdrawals from their retirement accounts, specifically IRAs and 401(k)s, while still being subject to income taxes. Group 1: Penalty-Free Withdrawal Conditions - Individuals can withdraw funds from an IRA without penalties if they are unemployed for at least 12 weeks and the funds are used to pay health insurance premiums [1] - To qualify for penalty-free withdrawals due to medical expenses, the total medical expenses must exceed 7.5% of the individual's adjusted gross income (AGI) [3][4] - First-time homebuyers can withdraw up to $10,000 from an IRA without penalties for a down payment, but income taxes will still apply [7] Group 2: Other Withdrawal Scenarios - Withdrawals can be made penalty-free to pay off IRS levies on retirement accounts [6] - In the event of the account holder's death, beneficiaries can withdraw funds without incurring penalties [11] - Individuals under 59½ can set up consistent withdrawals from retirement plans for income under Section 72(t) of the tax code, provided they adhere to specific rules [12] Group 3: Tax Implications - While certain withdrawals may be penalty-free, they are still subject to ordinary income tax rates [22] - Nondeductible contributions to traditional IRAs and 401(k)s are not taxed upon withdrawal, but earnings are still taxable [22] - Roth IRA contributions can be withdrawn at any time without penalties, and earnings can be withdrawn tax-free after age 59½ if the account has been open for at least five years [22]