Quicker access to retirement plan funds — Business Management Daily: Free Reports on Human Resources, Employment Law, Office Management, Office Communication, Office Technology and Small Business Tax Business Management Daily
  • LinkedIn
  • YouTube
  • Twitter
  • Facebook
  • Google+

Quicker access to retirement plan funds

Get PDF file

by on
in Small Business Tax

Q: You said retirement plan participants must pay a 10 percent penalty tax for withdrawals before 55 (see 4/18/05 issue). Isn't the correct age 59 1/2? C.F., via e-mail

A: In most cases, you'd be correct: Withdrawals before age 59 1/2 are subject to the 10 percent penalty, unless you're eligible for certain exceptions, such as withdrawals to pay medical expenses above 7.5 percent of your AGI. But another little-known exception exists: You can tap into your qualified plan without suffering the 10 percent early-withdrawal penalty if you "separate from service" and are at least age 55 at the time. (IRC Section 72(t)(2)(A)(v)) Tip: That separation-from-service exception applies only to participants in qualified retirement plans, not IRAs.

Related Articles...

Leave a Comment

Previous post:

Next post: