Withdrawal from a Non-Q annuity pre 59.5 exceptions
I have inherited a new client who take a $20,000 withdrawal from his annuity last year to finish paying for his sons college education. He was 54 at the time and didnt know the 10% IRS early distribution fine. What exceptions if any are there? Since its for school does he get a a pass on the fine?
Thanks
Permalink Submitted by Alan - IRA critic on Tue, 2016-10-18 17:53
Education or certain medical related expenses waive the penalty on an IRA distribution, but not for a non qualified annuity. Annuity exceptions include death, disability, age 59.5 or SEPP payments. Note that the penalty applies only to the taxable portion of a distribution, so if Box 2a is less than 20,000, the penalty will only apply to the amount in 2a.
Permalink Submitted by Zachariah Hammel on Wed, 2016-10-19 15:33
Thank you