72T Exceptions & SEPP Explained
Would you like a personalized estimate of what your 401(k), TSP, 403(b), 457 plan or IRA might produce for an income, using a 72t for early withdrawals to eliminate the IRS penalty?
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Reasons for a 72(t) Exception
The 72(t) distribution will NOT be subject to the 10% additional early distribution tax in the following circumstances:
- Age: after participant/IRA owner reaches age 59½
- Automatic Enrollment: permissive withdrawals from a plan with auto enrollment features
- Corrective Distributions: corrective distributions (and associated earnings) of excess contributions, excess aggregate contributions and excess deferrals, made timely.
- Death: after death of the participant/IRA owner
- Disability: total and permanent disability of the participant/IRA owner
- Domestic Relations: to an alternate payee under a Qualified Domestic Relations Order
- Education: qualified higher education expenses
- Equal Payments: series of substantially equal payments
- ESOP: dividend pass through from an ESOP
- Homebuyers: qualified first-time homebuyers, up to $10,000
- Levy: because of an IRS levy of the plan
- Medical: amount of unreimbursed medical expenses (>7.5% AGI; after 2012, 10% if under age 65), or health insurance premiums paid while unemployed.
- Military: certain distributions to qualified military reservists called to active duty
- Returned IRA Contributions: if withdrawn by extended due date of return, or earnings on these returned contributions
- Rollovers: in-plan Roth rollovers or eligible distributions contributed to another retirement plan or IRA within 60 days (also see FAQs: Waivers of the 60-Day Rollover Requirement)
- Separation from Service: the employee separates from service during or after the year the employee reaches age 55 (age 50 for public safety employees of a state, or political subdivision of a state, in a governmental defined benefit plan)