The term qualified retirement plan means: A qualified employee retirement plan such as a 401(k), A qualified annuity plan, A tax-sheltered annuity plan for employees of public schools or tax-exempt organizations, An IRA including a Simple IRA. To discourage the use of deferred qualified retirement funds for purposes other than normal retirement, the law imposes an additional 10% tax on certain early distributions of these funds. Early distributions are those you receive from a qualified retirement plan before reaching age 59.5. Distributions that you roll over to another qualified retirement plan are not subject to this 10% tax. There are certain exceptions to this penalty. Four of these exceptions apply to distributions from either a qualified retirement plan or an IRA. They are: Distributions made to your beneficiary or estate on or after your death, Distributions made because you are totally and permanently disabled, Distributions made as part of a series of substantially equal periodic payments over the life expectancy of the owner or life expectancies of the owner and the beneficiaries. If these distributions are from a qualified employee plan, you must separate from service with this employer before the payments begin for this exception to apply, and Distributions that are equal to or less than the amount of deductible medical expenses, that is, the amount of your medical expenses that are more than 7.5% of your adjusted gross income. You do not have to itemize to meet this exception. The following additional exceptions apply only to distributions from a qualified employee retirement or annuity plan: Distributions made to you after you separated from service with your employer, if the separation occurred after you reached age 55. Distributions made under qualified domestic relations orders (QDROs). The following exceptions apply only to IRAs: Distributions made to pay for certain qualified higher education expenses. Distributions made to pay for first-time home buyers. These exceptions do not apply to qualified employee retirement or annuity plans. Back to Top
The term qualified retirement plan means:
To discourage the use of deferred qualified retirement funds for purposes other than normal retirement, the law imposes an additional 10% tax on certain early distributions of these funds.
Early distributions are those you receive from a qualified retirement plan before reaching age 59.5.
Distributions that you roll over to another qualified retirement plan are not subject to this 10% tax. There are certain exceptions to this penalty. Four of these exceptions apply to distributions from either a qualified retirement plan or an IRA. They are:
The following additional exceptions apply only to distributions from a qualified employee retirement or annuity plan:
The following exceptions apply only to IRAs:
Back to Top