withdrawal at age 59.5

re: IRA withdrawal at age 59.5:
If someone turns 59 and a half in April, 2010, can they begin penalty free IRA withdrawals at the beginning of the year they turn 59.5 which is January, 2010? (On Jan., 2010 they would only be 59.25 years old).
Also, if they do a temporary 60 day no penalty temporary withdrawal from an IRA in Nov. 7 , 2009 and pay it back to the IRA Jan. 4, 2010, can they then do a penalty free distribution on Jan. 4, 2010? I assume a 60 day temporary “withdrawal” is not the same as post age 59.5 distribution, so the client would not run into a restriction that a person can only have one 60 day temporary withdrawal every 12 months.

Taxpayer must actually reach the exact day they turn 59.5 in order to eliminate the early withdrawal penalty. The IRA custodian has the date of birth and will code any distribution prior to half birthday as early. If the taxpayer takes out money both before and after the half birthday, they will get two 1099R forms, one coded early and one coded as a normal distribution. Age 59.5 is defined as exactly 6 months following the 59th birthday. It is not necessary to count the days in each month.

With respect to your rollover question, if the taxpayer takes a distribution 60 days prior to turning 59.5 and rolls it back to the IRA or to another IRA, it would not be taxable under the rollover rules. The next distribution after 59.5 would be penalty free, so this would work as long as the taxpayer has a rollover to use and the money to put back within 60 days. Any rollover counts against the 12 month limit irrespective of the age when the distribution is taken.

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