7 IRA mistakes to avoid

Getting blindsided by a withdrawal penalty

IRAs can be tempting to draw on for big purchases, emergencies or to help out a family member. But until you reach 59 ½, only certain withdrawals are allowed without penalty for a traditional IRA. (You can withdraw from a Roth IRA without penalty.)

"Probably the biggest mistake is taking money out of an IRA as an early distribution without realizing just how much it’s going to cost in taxes and penalties," says Erin Baehr, a certified financial planner who heads Baehr Family Financial in Stroudsburg, Pennsylvania. "If you’re in the 25% bracket and you have a penalty, it’s going to be a huge hit."

You should check with the IRS or a tax professional if you're uncertain, but in general you can take money out without penalty for deductible medical expenses, college costs and a first-time home purchase. Otherwise, you’re going to get hit with taxes and a 10% IRS penalty.