What happens if I take money out of my Qualified Plan or IRA prior to reaching 59 and 1/2?

If you take money out of a qualified plan or IRA before you reach the age of 59 and 1/2, your withdrawal is called an early distribution, and you will have to pay a 10% early distribution tax on the money unless you can meet one of the following exceptions:

you are age 59 and 1/2
you die
you become disabled
if you choose to take substantially equal periodic payments
if you are at least 55 years when you leave the job (this rule does not apply to IRAs)
if you withdraw the money to pay medical expenses (the tax exemption only applies to the portion of your medical expenses that would be deductible if you itemized deductions on your tax return)
if you withdraw the money to pay child support or alimony
if you use the money to pay a federal tax levy
health insurance premiums (this exemption is unique to IRAs and certain conditions must be met)
you received unemployment compensation for at least 12 consecutive weeks, you received the funds from the IRA during a year in which you received unemployment compensation or during the following years, the IRA distribution is received no more than 60 days after you return to work
higher education expenses (certain conditions have to be met such as the distributions are used to pay for tuition, fees, books, supplies, and equipment, the expenses are paid on behalf of the IRA owner spouse, child, or grandchild, and the distributions do not exceed the amount of the higher education expenses)
first home purchase (lifetime distribution limit of $10,000, the IRA distribution must be used for the acquisition, construction, or reconstruction of a home, the funds must be used within 120 days of receipt, the funds must be used to purchase a principal residence for a first-time home buyer, the first time home buyer must be the IRA owner, or the owner's spouse, or an ancestor)