Asked which, if any, premature distributions
of retirement savings they had taken, 40.
Of course, pre-591/2 distributions must satisfy the "substantially equal periodic payment" (SEPP) rules of IRC Section 72(t) to avoid the additional 10 percent penalty tax for premature distributions
Of course, pre-59V2 distributions must satisfy the "substantially equal periodic payment" (SEPP) rules of IRC Section 72(t) to avoid the additional 10 percent penalty tax for premature distributions
Individuals and their tax advisors should acquaint themselves with the options available in order to plan for IRA distributions that avoid a common pitfall in retirement planning: the penalty for premature distributions
The American Taxpayer Relief Act of 2012 ("ATRA") allows 401(k) plan participants to convert funds held in their traditional 401(k) accounts into Roth 401(k) accounts without triggering the 10 percent penalty on premature distributions
Thus, nonqualified loans are subject to the penalty tax on premature distributions
if none of the usual statutory exceptions applies.
While he would still have to pay income taxes on the distributions from his qualified plan, he can avoid the 10% penalty for premature distributions
by employing "a series of substantially equal periodic payments" under IRC [section] 72(t).
Distributions made to an alternate payee under a QDRO are not subject to the 10-percent-penalty tax normally applied to premature distributions
from qualified retirement plans (i.
Regularly calculated tax for AMT purposes excludes certain taxes including: (1) the alternative minimum tax; (2) the tax on benefits paid from a qualified retirement plan in excess of the plan formula to a 5% owner; (3) the 10% penalty tax for certain premature distributions
from annuity contracts; (4) the 10% additional tax on certain early distributions from qualified retirement plans; (5) the 10% additional tax for certain taxable distributions from modified endowment contracts; (6) taxes relating to the recapture of the federal subsidy from use of qualified mortgage bonds and mortgage credit certificates; (7) the additional tax on certain distributions from education IRAs; and (8) the 15% additional tax on medical savings account distributions not used for qualified medical expenses.
If the IRA owner is under the age of 59 1/2, then the IRC Section 72(t)(2)(A)(iv) exception could be used to avoid the 10% penalty tax on premature distributions
With a large number of corporate executives retiring before age 59 1/2, planning to avoid the penalties that are imposed for premature distributions
is an essential step in the planning process.
As the Tax Court noted in this case, taxpayers "cannot have it both ways"--they can't avoid the tax by rolling over the inherited IRA and, later, when premature distributions
are received, claim they were due to a death to avoid the 10% penalty tax.