If you take an early distribution before you reach 59 1/2 years of age, then you will be assessed a 10% additional tax
by the IRS. This tax is not actually called a penalty under the law
-- but, that's what it actually is, so everyone calls it a 10% penalty, rather than an "additional" tax.
There are several exceptions under which a 401(a) distribution can be taken without being assessed the 10% additional tax. You do not owe the 10% tax to the extent that your early distribution is:
1. Made to a beneficiary after your death.
2. Made because the employee has a qualifying disability.
3. Made as part of a series of substantially equal periodic payments.
4. Made after separation from service if the separation occurred during or after the year when the employee reached age 55.
5. Made to an alternate payee under a qualified domestic relations order (QDRO).
6. Made to an employee for medical care.
7. Timely made to reduce excess contributions under a 401(a) plan.
8. Timely made to reduce excess employee or matching employer contributions (excess aggregate contributions).
9. Timely made to reduce excess elective deferrals.
10. Made because of an IRS levy on the plan.
11. Made a qualified reservist distribution.
Please let me know if you have questions about any of these exceptions.
Hope this helps.
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