You can take advantage of some flexibility in tax rules for retirement accounts, but only if you can prove you qualify.
For example, individuals who take distributions from their retirement plans before reaching age 59½ are generally subject to a 10% “early withdrawal” penalty.
However, several exceptions exist, including: to help fund a first-time home purchase, to pay qualified higher education expenses, to cover certain medical expenses, to pay an IRS levy and more. In one case, the 10% penalty was upheld against a taxpayer because he failed to show proof that an exception applied.
Since the IRS has little discretion about waiving the early withdrawal penalty, it’s important to verify that your withdrawal qualifies for an exception before you make the transfer.