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Old 02-10-2008, 08:49 PM
 
Location: Hometown of Jason Witten
5,985 posts, read 4,378,901 times
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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 If I am interpreting Publication 575 correctly, I am exempt from the additional 10% tax on the amount withdrawn because I was older than 55 at the time.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.
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Old 02-10-2008, 08:57 PM
 
16,177 posts, read 32,497,441 times
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Quote:
Originally Posted by Ridgerunner View Post
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 If I am interpreting Publication 575 correctly, I am exempt from the additional 10% tax on the amount withdrawn because I was older than 55 at the time.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.
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Old 02-10-2008, 08:58 PM
 
Location: Beautiful East TN!!
7,280 posts, read 21,321,489 times
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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).
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Old 02-10-2008, 09:11 PM
 
Location: Hometown of Jason Witten
5,985 posts, read 4,378,901 times
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Originally Posted by mbmouse View Post
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.
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Old 02-10-2008, 09:13 PM
 
Location: Hometown of Jason Witten
5,985 posts, read 4,378,901 times
Reputation: 1922
Quote:
Originally Posted by mbmouse View Post
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.
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Old 02-10-2008, 09:29 PM
 
16,177 posts, read 32,497,441 times
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Originally Posted by Ridgerunner View Post
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.
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Old 02-10-2008, 09:36 PM
 
Location: Hometown of Jason Witten
5,985 posts, read 4,378,901 times
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Originally Posted by SmokyMtnGal View Post
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."
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Old 02-10-2008, 09:38 PM
 
16,177 posts, read 32,497,441 times
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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.
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Old 02-10-2008, 09:39 PM
 
16,177 posts, read 32,497,441 times
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Quote:
Originally Posted by Ridgerunner View Post
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
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Old 02-10-2008, 09:41 PM
 
16,177 posts, read 32,497,441 times
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good to go! If 2 appears in Box 7 you are exempt!
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