403(b) Distribution
A school teacher retired at age 50 and is now age 55. Can he take distributions from his 403(b) without paying the 10% pre-59 1/2 penalty?
thanks
A school teacher retired at age 50 and is now age 55. Can he take distributions from his 403(b) without paying the 10% pre-59 1/2 penalty?
thanks
Permalink Submitted by Alan - IRA critic on Tue, 2015-06-02 17:45
Only if he sets up a 72t plan in which substantially equal periodic payments are distributed from the 403b. Such plans are inflexible and must last the longer of 5 years or to age 59.5. Under the age 55 separation from service penalty exception, if the teacher had retired in the year they reached 55 or later, penalty free distributions could be taken from the 403b. However, since he retired before 55 must wait until 59.5 for penalty free distributions, or start a 72t plan. If he is interested in a 72t plan, he should roll the 403b over to an IRA and use the IRA to establish the 72t plan.