Code 2 on 1099R

Taxpayer turned 55 in 2014. She changed jobs and withdrew her 401k. Her 1099R shows a Code 2 in box 7 so no early withdrawal penalty on her taxable distribution is being computed. Is this correct? Is this the Separation from service at age 55 exception? It seems too good to be true. Thanks, Joe



Yes, that is exactly what this is. It applies even if her 55th birthday in 2014 was after the separation date.



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