I made a comment in another thread about my employer allowing penalty-free 401(k) distributions starting at age 50. Several folks commented they didn't think this was possible so I asked some additional questions.
I confirmed with our HR VP (who does all the 401(k) stuff and IS our HR department) the lack of a penalty was was not related to 72(t). He said our normal retirement age is 50 and the ability to retire at 50 and take penalty free withdrawls was approved by the IRS in writing. Is it because our normal retirement age is 50 which is lower than I've ever seen? Our plan also takes 401(k) rollovers from other plans so I can move other money into my current 401(k) and have it qualify for "early" distribution.
HR VP said the tax preparer of someone who retired last year at around 50 was having a tough time understanding how the retiree could take withdrawals and not have to pay a penalty but that is how our plan is structured. Is the IRS basically looking at the code on the 1099 to see if an early withdrawl penalty applies? If the code is "correct", no penalty?
I also posted the question on the Fairmark message board to see if any of the tax pros have heard of this. I have no reason to believe VP of HR is not telling the truth or hasn't followed all the rules required to make this so. We have a nice plan with good matching and profit sharing and both the the regular and the Roth 401(k) option.
Comments?
I confirmed with our HR VP (who does all the 401(k) stuff and IS our HR department) the lack of a penalty was was not related to 72(t). He said our normal retirement age is 50 and the ability to retire at 50 and take penalty free withdrawls was approved by the IRS in writing. Is it because our normal retirement age is 50 which is lower than I've ever seen? Our plan also takes 401(k) rollovers from other plans so I can move other money into my current 401(k) and have it qualify for "early" distribution.
HR VP said the tax preparer of someone who retired last year at around 50 was having a tough time understanding how the retiree could take withdrawals and not have to pay a penalty but that is how our plan is structured. Is the IRS basically looking at the code on the 1099 to see if an early withdrawl penalty applies? If the code is "correct", no penalty?
I also posted the question on the Fairmark message board to see if any of the tax pros have heard of this. I have no reason to believe VP of HR is not telling the truth or hasn't followed all the rules required to make this so. We have a nice plan with good matching and profit sharing and both the the regular and the Roth 401(k) option.
Comments?