Age 59 1/2: Actual date or year in which it happens
For someone to make a penalty free distribution (not including the exceptions) from an IRA, the person must be 59 1/2. Does that mean 6 months after their 59th birthday or anytime in the calendar year that they will turn 59 1/2?
Permalink Submitted by Alan Spross on Fri, 2007-11-16 19:35
It means 6 months after their 59th birthday, or 183 days after to be sure.
Permalink Submitted by Anonymous (not verified) on Thu, 2011-08-11 19:25
Hello:
Could not find anything by searching “183”.
Does anyone know where it states in official IRS language that 59 1/2 is 59 plus 183 days?
Thanks.
pko
Permalink Submitted by Edward Angello on Thu, 2011-08-11 19:29
It’s the actual date, 6 months after the 59th birthday. You make a good point, because the age 55 exception for employees of qualified plan who terminate employment from the sponsor “IN THE YEAR” they turn 55 years of age are exempt from the 10% penalty. This rule does not apply to the age 59 1/2.
Good Luck!
Permalink Submitted by mk foss on Thu, 2011-08-11 21:07
I think it’s been claried that someone must have separated from service after attaining age 55.
See bwlow copied from my tax research service.
[i]72(t)(2)(A)(v)
made to an employee after separation from service after attainment of age 55,[/i]
I know that custodians watch the 1/2 birthday. I had a client that received 2 Forms 1099R one year; one for those before she became 59-1/2 and one for distributions later that year.
Permalink Submitted by Alan Spross on Thu, 2011-08-11 21:16
For 59.5, the inference is that the IRS Reg for reaching the half year 70.5 also applies for 59.5, ie 6 months after the date of 59th birthday. Do not use a set number of days such as 183.
http://www.retirementdictionary.com/definitions/59andhalfage
Permalink Submitted by Peter Lingane on Tue, 2011-08-16 05:16
72(t)(2)(A)(i) says “made on or after the date on which the employee attains age 591/2.”
There is a legal principle that one “attains” a given age on the first moment of the day before the anniversary of birth. This rule is designed to handle leap years and avoid the problem of Frederic, the young man in the Pirates of Penzance, who had lived twenty one years but who was still many birthdays from his majority. This principle suggests that someone born August 15, 1952 “attains” age 59 on August 14, 2011 and age 591/2 on Valentine’s Day 2012.
The definition in the Appleby Retirement Dictionary cites Reg. 1.401(a)(9)-2,Q&A 3. This reg. defines 701/2 as six calendar months after the seventieth anniversary of the employee’s birth. Thus age 701/2, and by implication age 591/2, appears to be an exception to the general definition of age.
How does this reg. apply to someone born on February 29, 1952? July 29, 2011 feels like the right answer but if we follow the reg. literally March 1, 2011 would be to be the 59th anniversary of birth and August 1, 2011 would be the penalty deadline.