Regardless of your age, you'll need to file a 1040 form and show the amount of the IRA withdrawal. Your Roth IRA withdrawals are tax-free as long as you're 59 and a half or older and your account is at least five years old. Withdrawals from traditional IRA accounts are taxed as regular income, depending on the tax bracket of the year in which you make the withdrawal. If you're planning for retirement and are wondering: “How can I avoid paying retirement taxes on my IRA when I retire? plan ahead and open a Roth IRA instead of a traditional IRA.
A traditional IRA is funded with your pre-tax dollars, and you pay taxes when you withdraw the funds. However, a Roth IRA is funded with after-tax dollars. Since you've already paid taxes on the money in your Roth IRA, you won't have any tax liability when you one day withdraw the funds. The other time you risk receiving a tax penalty for withdrawing money early is when you transfer money from one IRA to another qualified IRA.
There are some exceptions due to financial hardship to the penalties for withdrawing money from a traditional IRA or from the investment earnings portion of a Roth IRA before turning 59 and a half years old. Early next year, you'll receive a Form 1099-R from your IRA trustee or custodian if you make any withdrawals from your IRA this year. If you expect your tax bracket to be higher when you retire than it is now, it may make sense to convert your traditional IRA to a Roth IRA.