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Are IRA distributions without penalty allowed in the year you

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turn 59 1/2 or do...
Are IRA distributions without penalty allowed in the year you turn 59 1/2 or do you have to wait until you reach 59 1/2.
Submitted: 6 years ago.Category: Tax
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Answered in 33 minutes by:
12/2/2011
Tax Professional: Lev, Tax Advisor replied 6 years ago
Lev
Lev, Tax Advisor
Category: Tax
Satisfied Customers: 30,339
Experience: Taxes, Immigration, Labor Relations
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Hi and welcome to Just Answer!
To avoid 10% additional tax on early distributions - you need to be 59 1/2 at the time of distribution.
If you take the distribution before reaching age 59 1/2 - that distribution will be subject of 10% additional tax even you reach age 59 1/2 in the year of distribution.

 

Here is a reference to the statute - http://www.law.cornell.edu/uscode/usc_sec_26_00000072----000-.html
(t) 10-percent additional tax on early distributions from qualified retirement plans

(1) Imposition of additional tax
If any taxpayer receives any amount from a qualified retirement plan (as defined in section 4974 (c)), the taxpayer’s tax under this chapter for the taxable year in which such amount is received shall be increased by an amount equal to 10 percent of the portion of such amount which is includible in gross income.
(2) Subsection not to apply to certain distributions
Except as provided in paragraphs (3) and (4), paragraph (1) shall not apply to any of the following distributions:
(A) In general
Distributions which are—
(i) made on or after the date on which the employee attains age 591/2,

...
There are certain exceptions to this additional tax - http://www.irs.gov/taxtopics/tc557.html - you may verify if any may be used in your situation.

Let me know if you need any help or clarification or have other tax related issues.

Lev
Lev, Tax Advisor
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