If you must, there are safer ways to raid your retirement.

It can be costly to raid your retirement account. If you withdraw money prior to age 59 1/2, it will trigger income tax and a federal 10% penalty. But the worst part is that future compounded interest earned by deferring taxes may be lost. If a 30-year-old withdraws $1,000 annually from a 401(k), or an individual retirement plan, they could end up losing more than $11,000 of future retirement funds.

There were several ways to avoid paying the fine in the past. Congress has recently expanded the list of exceptions, some of which allow for repayment within 3 years. This would let you get back the tax you paid, and — even better — the money could start to grow again for you, with no taxes.

Erin Itkoe is the director of Tarbox Family Office in Scottsdale, Arizona, which provides wealth management services. She says that you’re better off keeping your retirement fund for later use. She says that if you cannot, then you should at least try to limit the harm of taking money early.

These new exceptions to penalty are part of Secure 2, a package that Congress approved late last year. David Certner is the legislative counsel at AARP. He says that some exceptions apply to your IRA now while others will be implemented in future years. Certner also says that the exceptions can be applied to plans at work, like 401(k), 403(b), but your employer may need to opt-in, so make sure to check with your HR department.

The repayment option is not available in most cases. You can, for example, avoid the penalty if withdrawing $10,000 from your IRA to cover a home-purchase or higher education costs. However, you will not be able later to refund the money and receive the tax refund.

Disasters are eligible for a new exception to the penalty rule that permits repayment. If you live in an area that has been declared a disaster by the federal government and have suffered a financial loss, then up to $22,000 can be withdrawn without penalty. The withdrawal still requires income tax to be paid, but it can be split over a period of three years in order to minimize the possible impact on taxes. The exemption is retroactively effective to January 26, 2021.

A terminal illness is another possible large exception with repayment options. Itkoe is a CPA and member of the American Institute of CPA’s personal financial planning executive council. She says that, as of this year, 10% of the penalty will be waived for those whose doctors certify they expect to die in the next seven years. The amount that can be taken out is unlimited.

The penalty exemption now includes a three-year period of repayment when you adopt or have a child. The exception permits each parent to withdraw $5,000 within 12 months of the birth or adoption of a child.

The 10% fee will be waived next year for domestic violence victims. This penalty-free withdrawal can only be made up to $10,000, or half of your account value. It is repayable over three years.

The distribution of $1,000 or less for certain emergency costs will also be available next year, without any penalties. If the funds are repaid, people can withdraw up to $1,000 per year without penalty. If not, then only one withdrawal is permitted every three years.

Itkoe says that these two exceptions can be “self-certified,” meaning that they are based on a statement that states that the applicant meets all requirements.

The penalty exemption for paying for long-term insurance begins in 2026. However, it applies only to plans offered by employers, and not IRAs. Certner points out that withdrawals are limited to $2,500 and 10% of account balance, but cannot be used for actual medical care.

Secure 2 also extended the exception “public safety employees” for early withdrawals of workplace plans.

In the past the 10% penalty did not apply to withdrawals of workplace plans by workers who left their jobs in the same year that they turned 55, or 50 for employees working for the public safety. The public safety exemption is now available to private sector firefighters, state and local corrections agents and even those in the private sector who have reached age 50. Those who have worked in public safety for at least 25 consecutive years with an employer that sponsors the pension plan are also exempt from the age penalty.

Here is a brief summary of new penalties exceptions. Itkoe advises that the rules are so complex, people should seek advice from a professional tax advisor before making a withdrawal. If the withdrawal is returned, a tax professional can also help with submitting an amended return.

No one should think that retirement withdrawals are a great idea because most people will not pay back the money even if given the opportunity to, says she.