Invade your IRA without penalty

Usually, you have to pay a 10% penalty tax on IRA withdrawals prior to age 59½, plus the regular income tax you owe.

Strategy: Take advantage of exceptions for early withdrawals. These tax loopholes are written right into the tax code. The following list is not all-inclusive, but here are four prime examples of situations when you can avoid extra tax damages on top of the regular tax liability.

1. Take separate, but equal, payments

No 10% tax penalty is imposed if you receive "substantially equal periodic payments" (SEPPs) based on your life expectancy or joint life expectancies of you and a designated beneficiary. To qualify, the payments must last for at least five years or until you turn age 59½, whichever comes later.

Tip: The IRS has approved three permissible methods for computing SEPPs for this purpose.

2. Stay tax-healthy

If you've been hit with an unexpected medical bill, you may not have all the cash you'll need. IRA withdrawals used to pay medical expenses are exempt from the penalty tax to the extent the cost qualifies for the medical expense deduction.

Tip: Similarly, if someone loses their job, pre-age 59½ withdrawals are exempt from the penalty if the funds pay for health insurance.

3. Unlock tax break for homeowners

You don't have to pay the penalty if funds are used for first-time homebuyer expenses. For example, you might withdraw IRA money to help your child buy a home. Even though you're not the homeowner, the withdrawal still qualifies if the home is your child's principal residence and he or she hasn't owned a home within two years.

Tip: Unlike the other exceptions, there's a lifetime dollar cap of $10,000.

4. Pass tax test for education expenses

Do you need help paying for your child's college education? If funds are withdrawn for qualified expenses, the distribution isn't subject to the 10% penalty tax. This includes tuition, books, supplies, etc.—even room and board if your child is a full-time student. Furthermore, this tax break isn't limited to your children. It's also available for expenses paid on behalf of yourself, your spouse or grandchildren.

Tip: Comparable exceptions apply to early withdrawals from company plans.