Penalty Free Distributions Age 59 1/2
I remember once hearing that penalty free distribtuions from an IRA account can be taken during the calendar year one turns 59 1/2 and not necessarily after 59 1/2. Does anyone have a cite for the answer to this question?
I have client who took out large IRA distributions in January and June of 2008 but did not turn 59 1/2 until Decedmber of that year.
Permalink Submitted by Bruce Steiner on Fri, 2009-04-03 21:11
Section 72(t)(2)(A)(i) contains an exception for distributions which are “made on or after the DATE on which the employee attains age 59 1/2”. (Emphasis added.)
Permalink Submitted by Alan Spross on Fri, 2009-04-03 21:36
You may be confusing this with the separation from service exception which applies to distributions from qualified plans (not IRAs) when separation occurs IN the year the employee reaches age 55 or later. All the age 59.5 related penalties are based on reaching the exact date.