simple plan distributions
Is a simple plan eligible for withdrawal at 55 without the 10% penalty if they are retired or no longer working at the employer. Also if they have taken a different job but left the simple plan with the previous employer can they take money out at 55. The plan has been established longer than two years. Thanks
Permalink Submitted by Alan Spross on Tue, 2010-03-16 22:17
No, SEP and SIMPLE IRA accounts are subject to IRA distribution rules, and the age 55 separation exception does not apply to them.
Although typically a last resort, if they need a stream of income prior to age 59.5, they could implement a 72t (SEPP) plan from one of more IRA accounts that must continue for the longer of 5 years or until age 59.5. Distributions would be taxable, but exempt from the early withdrawal penalty. If they already have new employment, the SEPP plan would probably be avoided.