IRA distribution
A client took a distribution from their IRA — 3 months prior to turning 59.5 yrs.
They though it was okay at 59.
They turned 59.5 on July 1 and took the distribution in March prior to turning 59.5.
Will they be subject to the 10% penalty?
Thanks. Susan
Permalink Submitted by Alan Spross on Thu, 2010-11-04 21:55
Yes, there will be a penalty unless the client meets an exception to the penalty for a different reason than age, eg higher education, disability, medical expenses more than 7.5% of AGI, first home purchase, etc. The custodian will code the 1099R with Code 1, ie early distribution, but that can be overriddent using Form 5329 if one of those exceptions applies.