Any Tax Experts Out There? (closing, safety, horse)

[Ridgerunner]

Last year when my job went away I had to take an early 401(k) Lump Sum Distribution to avoid becoming a street person. If I am interpreting Publication 575 correctly, I am exempt from the additional 10% tax on the amount withdrawn because I was older than 55 at the time. Is this correct? The answer will determine if I owe them or they owe me.

[Beretta]

Originally Posted by Ridgerunner

Last year when my job went away I had to take an early 401(k) Lump Sum Distribution to avoid becoming a street person. If I am interpreting Publication 575 correctly, I am exempt from the additional 10% tax on the amount withdrawn because I was older than 55 at the time. Is this correct? The answer will determine if I owe them or they owe me.

I thought the age was 59 and a half for the cutoff?

I am not an accountant or qualified to give advice.

[mbmouse]

You can check out IRS.gov, you might get the exact answer. I know they also have a phone number listed so you can ask the horse it's self (you know, straight from the horses mouth hahahahah).

[Ridgerunner]

Originally Posted by mbmouse

You can check out IRS.gov, you might get the exact answer. I know they also have a phone number listed so you can ask the horse it's self (you know, straight from the horses mouth hahahahah).

Mbmouse, I don't know which has been more confusing: IRS publications or IRS people. SMG, I'm not yet 59.5, but Publication 575 seems to indicate that being permanently separated due to a plant closing lowers the age to 55. I certainly hope so.

[Ridgerunner]

Originally Posted by mbmouse

You can check out IRS.gov, you might get the exact answer. I know they also have a phone number listed so you can ask the horse it's self (you know, straight from the horses mouth hahahahah).

By the way, that IRS number is 1-800-BUSYSIGNAL.

[Beretta]

Originally Posted by Ridgerunner

Mbmouse, I don't know which has been more confusing: IRS publications or IRS people. SMG, I'm not yet 59.5, but Publication 575 seems to indicate that being permanently separated due to a plant closing lowers the age to 55. I certainly hope so.

That may be. I hope so too for you! Let me check a second with my accountant; he is online.

[Ridgerunner]

Originally Posted by SmokyMtnGal

That may be. I hope so too for you! Let me check a second with my accountant; he is online.

SmokyMtnGal, I appreciate you very much. The distribution code in Box 7 of the 1099-R is "2."

[Beretta]

Here you go!!!

In regards to Publication 575, It appears that there are some exceptions to the 59.5 rule and one is that the tax isn't applied to distributions from a qualified retirement plan other than an IRA after your separation from service in or after the year that you reach age 55. There are other rules that will lower that down to age 50 for certain public safety employees. It looks like you're getting the 10% coming your way; you owe me a Pal's ham biscuit and cheddar rounds!

*** disclaimer*** I am not an accountant and this information should be verified on your own.

[Beretta]

Originally Posted by Ridgerunner

SmokyMtnGal, I appreciate you very much. The distribution code in Box 7 of the 1099-R is "2."

he said: "that is a better code to have". With this new information he is double checking his message. BRB

[Beretta]

good to go! If 2 appears in Box 7 you are exempt!