55 separation of Service and distribution question
L1: 55 separation of Service and distribution questionHusband age 55, wife age 54. File joint return. Wife separated from service takes distribution from qualified plan. She alone would be subject to 10% penalty as not of age to qualify for 55 and separated from service exception. Filing a joint return doTHEY qualify for exceptionbecause of husband’s age?2009-03-12 01:24, By: BT Boss, IP: [184.108.40.206]
L2: 55 separation of Service and distribution question
If the wife turns 55 at any time during the same year in which she separated from service, then shemay be able to take penalty-free distributions from her qualified plan. The plan would have to allow this, though. Many plans do but some do not. If she rolls this money over into an IRA, then she cannot take penalty-free distributions before age 59.5 without implementing a 72t plan or meeting one of the other exceptions to the 10% early withdrawal penalty tax.
As to the tax issue, I doubt that the husband’s age is relevant to this question. Practically everything involving IRAsrelates toindividuals and not to couples or spouses, unless the IRA owner has died and the survivor is inheriting the IRA.
2009-03-12 04:01, By: Ed_B, IP: [220.127.116.11]
L3: 55 separation of Service and distribution questionI agree. The husband’s age is definitely immaterial with respect to her penalty exception.
As Ed indicated, if she separated at age 54, but turned 55 later in that same calendar year, she would qualify for the exception. The plan has discretion whether to allow partial distributions vrs a lump sum, but not with respect to the penalty waiver, as those requirements arefirmly stated in Sec 72t.2009-03-12 20:55, By: Alan S., IP: [18.104.22.168]