More than 40 million Americans have Individual Retirement Accounts (IRAs), with a third of all households having at least one traditional IRA and 17 percent having Roth IRAs, according to Fox Business.

But IRAs come with their fair share of rules and restrictions, which may leave people confused when it comes to all the ways in which they can be used. Here are three potentially surprising facts about IRAs that every saver should know.

You Can Make Penalty-Free Withdrawals — Sometimes

As a general rule, if you withdraw money from your traditional IRA before age 59 ½, you’re going to incur an additional 10 percent tax (the funds in a Roth IRA can be accessed at any time without incurring the additional tax). However, U.S. News and World Report notes that there are certain scenarios when this tax will be waived, such as if you:

  • Have medical expenses that are greater than 7.5 percent of your adjusted gross income.
  • Use the withdrawal to pay for health insurance after job loss.
  • Become disabled.
  • Are a military reservist ordered to active duty.
  • Incur higher education costs.
  • Use it to put up $10,000 ($20,000 for couples) toward the purchase of your first home.

Beneficiaries Don’t Pay Taxes on a Roth IRA

Name your kids or grandkids beneficiaries of your Roth IRA and, when the time comes, they’ll receive it tax-free, according to Bankrate. They also note that as long as you are still employed, you can continue to put money into the account after age 70 ½, giving the Roth IRA yet another benefit as an estate-planning tool.

Keep in mind that the rules aren’t the same for passing a traditional IRA on to your heirs. Bankrate reminds you that they’ll have to pay income tax on these distributions, since the funds in a traditional IRA have not yet been taxed.

Fox Business points out that Roth IRA beneficiaries should remember that they have no rollover option for the account. That’s because, technically, the deceased will always be listed as the account owner. In the article, Barry Picker, a Brooklyn-based CPA and IRA expert, notes that the only way to move the account is with a trustee-to-trustee transfer where you never actually get your hands on the cash.

An IRA Can Be Turned Into a Tax-Free Income Source

Looking to retire early? Or maybe you need some extra cash to cover a gap in employment or your child’s private school tuition. Bankrate points out that, if your retirement savings are in a good place, you may choose to access the money in your IRA by agreeing to take substantially equal periodic payments (SEPPs).

The site explains that SEPPs are equal payments that you agree to take from the account until age 59 ½, or for five years — whichever comes later. The benefit here is that the IRS doesn’t charge you an additional tax for taking SEPPs. Bankrate also notes that you’ll get hit with a penalty for stopping the payments before the agreed upon term, so be sure this is the route you want to take before committing.

Have you used your IRA in any of the ways mentioned above? What other products do you use to save for retirement?