What happens if I withdraw money for a non-eligible expense?

You’ll have to pay taxes on any non-eligible expense, plus a 10% penalty on the earnings portion of the withdrawal. A withdrawal used for a non-eligible expense, or for housing expenses even if they are qualified disability expenses, could affect your eligibility for Supplemental Security Income (SSI) benefits, Medicaid, or other much-needed benefits under federal or state programs, as could a withdrawal that is applied to a housing expense in any month after the month of the withdrawal.