IRA Withdrawal
Need assistance. Client retired in April at the age of 58. Transferred all 401k funds to IRA. Then in November decides to withdraw some of the funds. Does client still qualify for 55 and over/seperation of service exemption from the 10% penalty? Hoping for some type of relief period beings its close to the rollover date.
Permalink Submitted by Alan Spross on Tue, 2011-03-08 19:11
Unfortunately, the age 55 penalty exception only applies to distributions made directly from the qualified plan, not from an IRA. But check if one of the IRA exceptions might apply to the IRA distribution. At 59.5 client will no longer have to worry about penalties on IRA distributions.
Note that if there was any after tax money rolled over OR if the client made previous after tax contributions to the IRA, then a portion of the distribution would be tax and penalty free. Form 8606 is used to report any distributions when the IRA holds after tax money.
Permalink Submitted by Charles J. Grako on Tue, 2011-03-08 19:44
Thank you. That’s what I thought.