When Is The 59 1/2 Year Birthday?

[easysurfer]

From an okay to withdraw penalty free from 401K, IRA perspective, when does a person become 59 1/2 years old?

Seems there's two ways to calculate:

1) The Sure Hope I'm Calculating Correctly Method : add 6 months to 59th birthday (for example, if 59 years old on Jan 1, the 59 1/2 birthday will be July 1).

2) The 100% Certain Method: add 183 days to the 59th birthday since 183 days is greater than 365 divided by 2.

When my time comes, I'm 100% going with method #2. But I'm asking out of curiosity .

 

[pb4uski]

Dunno for sure, but I would go with 183 days. That said, I highly doubt that if it went to court that a judge would side with the IRS if the sought a penalty on a taxpayer that made a withdrawal on July 1 since it would be a reasonable interpretation of 59 1/2.

The stupid thing is that they put 59 1/2 in rather than 59 or 60.

 

[Big_Hitter]

pretty sure it's the day you turn 59.5

 

[Dtail]

Dunno for sure, but I would go with 183 days. That said, I highly doubt that if it went to court that a judge would side with the IRS if the sought a penalty on a taxpayer that made a withdrawal on July 1 since it would be a reasonable interpretation of 59 1/2.

The stupid thing is that they put 59 1/2 in rather than 59 or 60.

Same thing with the 70.5 RMD, but that's on the other side of the equation.

 

[MissMolly]

Same thing with the 70.5 RMD, but that's on the other side of the equation.

Not really. With RMD it's the YEAR you turn 70.5 not the exact day.

 

[NW-Bound]

Dunno for sure, but I would go with 183 days...

That appears to be safe, even for a leap year.

 

[NW-Bound]

OK. The matter has already been settled by this precedent court ruling. It's 183 days after your 59th birthday.

The following court ruling was about a 401k-to-IRA transfer case, but the judge did mention the 183-day ruling.

In a recent court case, a judge ruled against an IRA account owner who quit his job, rolled the money from his company retirement plan into an IRA, and then took a distribution from the IRA without paying the 10% penalty. The IRA account owner argued that he didn't owe the 10% penalty; the judge ruled otherwise.

"Why should it matter that the money went from the [worker's company] plan to an IRA before being withdrawn?" the judge wrote in his decision.

"The answer is that the Internal Revenue Code says that it matters…Many parts of the tax code are compromises, and all parts reflect the need for lines that can't be deduced from first principles," the judge said. "Why can an employee withdraw money from an employer's plan without the 10% addition at age 55 but not age 54? Why does the 10% additional tax apply to withdrawals at age 59 and 181 days, but not 59 and 183 days? These questions cannot be answered by logical analysis. The [Internal Revenue] Code's lines are arbitrary." Read more about that case, Young Kim v. CIR, 11-3390 (7th Cir. 2012).

 

[badatmath]

Oddly I can't find an answer to this online. I would wait 183 days or maybe 185 or something just to be certain.

 

[Big_Hitter]

Oddly I can't find an answer to this online. I would wait 183 days or maybe 185 or something just to be certain.

you may have to ask an actuary

 

[badatmath]

Well I did find this link: https://www.irahelp.com/forum-post/10709-age-59-12-actual-date-or-year-which-it-happens, which contains, in part, 72(t)(2)(A)(i) says "made on or after the date on which the employee attains age 591/2." There is a legal principle that one "attains" a given age on the first moment of the day before the anniversary of birth.


I will freely admit I did not look further to verify it. Just thought interesting.

 

[ziggy29]

Sticky question. But certainly, 59 and 183 days would be safest, since 183 days is *always* greater than or equal to half a year. In a leap year, I might actually wait 184 days to be very, very certain.

 

[easysurfer]

Sticky question. But certainly, 59 and 183 days would be safest, since 183 days is *always* greater than or equal to half a year. In a leap year, I might actually wait 184 days to be very, very certain.

I might just wait 184 days regardless. That way don't even have to remember if leap year or not.

With 183, I'm 100% sure that would work for a leap year.

With 184, I'm 110% sure .

 

[LOL!]

If your life depends on 2 day delay, then there is something special going on with you.

However, I can see that if someone is born on June 30th, they might want to make a penalty-free withdrawal around year-end in order to get the income into that tax year. I suppose the same goes for a July 1st birthday.

See http://www.retirementdictionary.com/definitions/59andhalfage where a person born on 6/30 is 59.5 on 12/30, but a person born the next day on 7/1 is 59.5 on 1/1.

Nobody can turn 59.5 (or 70.5) on 12/31.
https://www.govinfo.gov/content/pkg/CFR-2011-title26-vol5/pdf/CFR-2011-title26-vol5-sec1-401a9-2.pdf

 

[RobbieB]

I'd round up to 200 days in case the reviewer is incompetent.

 

[foxfirev5]

I'd round up to 200 days in case the reviewer is incompetent.

Exactly.

 

[jazz4cash]

There’s an app for that right here:
http://fiftynineandahalf.com/calculator.html

 

[bw5972]

To be double sure I waiteduntil the first day of the month AFTER the month my birthday plus 183 days fell.

 

[gcgang]

Government age rules don't always make sense. I turned 65 on June 1. So of course, for Medicare, I became eligible on May 1. They explained, if your birthday is on the first day of the month then you're really born in the prior month. Huh?

 

[easysurfer]

There’s an app for that right here:
Happy 59½ Birthday™ | the CALCULATOR

I tried the calculator on that site along with another at:

Find Date Given Age Calculator

Those two places calculate as 59th birthday plus 6 months which is the first method as described in my original post.

Here is one that allows for also adding days:

Find Future Date Calculator