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There is an exception to the 10% penalty on withdrawals from an IRA before age 59 1/2. It's called Substantially Equal Periodic Payments (SEPP) and it is in Code Section 72(t).

Basicially, if you start withdrawing based on a life expectancy formula you can take the money out as taxable, but without tax penalty. The negatives are:
-1- You have a one-time choice on the formula used
-2- You have to take distributions for the longer of 5 years or until you are 59 1/2. If you deviate from this, the penalties are even heavier than the 10% penalty.

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