72t vs pension – 10% penalty
L1: 72t vs pension – 10% penaltyI wonder if you all could help me with this question. I know how to avoid the 10% penalty formy 401k, but I got confused today when looking at the pension taxes I might have to payfor my pension benefit. I will be entitled to a pension benefit at the age of 55 (this in addition to my 401k).
If I quit my job before age 55, then start my pension after I turn age 55, and take monthly payments for life from this pension plan, will I have to pay a 10% penalty on the pension payments until I turn age 59 1/2? This is seperate from the 401k 72t plan I will have going. I didn’t think I would have to pay a 10% penalty on pension benefits before 59 1/2.
Thanks!2009-05-04 20:38, By: mikex, IP: [22.214.171.124]
L2: 72t vs pension – 10% penaltyThe life annuity from the pension plan should not result in any penalty tax – even if you separated from service before age 55 – most defined benefit plans allow for early retirement at age 55.2009-05-04 20:46, By: Gfw, IP: [126.96.36.199]
L3: 72t vs pension – 10% penaltyThanks.
That’s what I thought, but I got sidetracked by some websites that were using terms interchangably with each other (and incorrectly), such as pension, IRA, 401k, along with the 10% penalty. Basically confusing and sloppy information, and I got worried.
That’s why I came back here for the true answer.2009-05-05 01:48, By: mikex, IP: [188.8.131.52]
L2: 72t vs pension – 10% penaltyCan you get the best of both worlds by separating from service at 54 in the year that you WILL BECOME55, and defer starting to take your pension until after reaching 55 ? That way there will not be a 10% penalty on distributions from either plan.2009-05-05 01:50, By: dlzallestaxes, IP: [184.108.40.206]