Planning For Retirement Distributions
This page covers the following topics:
- Early Distributions
- Required Minimum Distributions
- Lump-Sum and Periodic Distributions
Early Distributions
10% Additional Tax on Early Distributions
To discourage the use of retirement funds
for purposes other than normal retirement, the law imposes a 10%
additional tax on certain early distributions of these funds. Early
distributions are those you receive from a qualified retirement plan or
deferred annuity contract before reaching age 59 ½. The term "qualified retirement plan" means:
- A qualified employee plan such as a 401(k) plan,
- A qualified employee annuity plan under section 403(a),
- A tax–sheltered annuity plan under section 403(b) for employees of public schools or tax–exempt organizations, or
- An eligible state or local government section 457 deferred
compensation plan, but only to the extent that any distribution is
attributable to amounts the plan received in a direct transfer or
rollover from one of the other plans listed above or an IRA.
Distributions that are not taxable, such
as distributions that you roll over to another qualified retirement plan
or a distribution of your designated Roth IRA contributions are not
subject to this 10% additional tax.