Age 59 1/2

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L1: Age 59 1/2I will turn 59 inlate 2010. I thought I read somewhere on this website that an individual could withdraw any amount from an IRA/SEPP without penalty – beginning in the year that he/she turns 59 1/2, rather than waiting until the actual date of 59 1/2. I have been thinking that I couldmake apenalty-free withdrawal in January to pay off some bills and buy a new car – as long as I don’t withdraw more than my normal annual SEPP amount until I actually do reach 59 1/2.Did I think wrong ?2010-04-22 18:16, By: David, IP: [71.233.26.219]
L2: Age 59 1/2
David:
I looked this up in IRS Pub. 590, pg. 53 “Early Distributions”. It makes no mention whatever of “the year in which you turn age 59 1/2”. What it does say, however, is:
“Early distributions generally are amounts distributed from your traditional IRA account or annuity before you are age 591/2, or amounts you receive when you cash in retirement bonds before you are age 59 1/2.”
It would be my assumption that you should attain age 59 + 6 months before tapping your IRA for penalty-free withdrawals.
Ed

2010-04-22 18:41, By: Ed_B, IP: [71.236.183.224]

L3: Age 59 1/2You have confused 2 different provisions. For IRAs, the age for early distributions is in fact 59 1/2.However, for 401-K plans, it is in fact any time in the year that you will become 55 !!!! provided you have “separated from service” with that employer.It is easy to see how you confused these different provisions when trying to trust your memory.2010-04-22 18:46, By: dlzallestaxes, IP: [173.49.30.37]

L4: Age 59 1/2The responses reflect an IRA that is NOT part of a SEPP (72t) plan. But apparently, your IRA herehas been under a 72t plan and therefore the pre 59.5 penalty is NOT a factor for you, not unless you happen to bust the SEPP plan. If you busted the plan, your penalty and interest would only apply to distributions you took prior to 59.5. Be sure you know your plan ending date. It is only 59.5 if you started your plan prior to 54.5. If you started after 54.5 the plan must run 5 years.Again, if you have an IRA account that is NOT part of your SEPP plan, then you must be aware that the 59.5 exception to the penalty requires that you reach that exact date, not just the year you reach that date.2010-04-22 21:47, By: Alan S., IP: [24.116.165.60]

L2: Age 59 1/2Not rocket science… Age 59.5 for purposes of an IRA is 59 years and 183 days – before that you have a penalty. After that you don’t have a penalty.2010-04-22 22:12, By: gfw, IP: [24.148.10.164]

L3: Age 59 1/2I think that Alan is correct in his readingthat you have an existing SEPP (72t) planrunning and you want to take out other than the usual withdrawals this year while still under 59 1/2. Not a good idea at this point.Use the “last date” (I think that is the name of it) calculator on this site, to see when your plan ends and when payments can be altered. It uses the date of your first payment and your date of birth to calculate out to the LATER DATE of either 5 years from the start, or age 59 1/2. I have a SEPP that started when I was 56, and is has to run until I am 61, as an example of the 5 year rule that takes one well past 59 1/2. Once you have that “end” date for your plan, you can see if and when you can take something else outwithout jeopardizing the SEPP plan.Have any of us answeredyour question?? Ken2010-04-23 03:35, By: Ken, IP: [71.192.120.143]

L4: Age 59 1/2I see two answers in the replies. Yes and No.More detail .. I started the SEPP in 2002 with $1.4M balance (beyond the 5 year rule now). I’ve been taking monthly withdrawals of about $6,000 (72k per year). I turn 59 on December 21, 2010.Can Iwithdraw up to $72,000 if I need to in January of 2011 – as long as I don’t withdraw any more until afterJune 21st, 2011 ? Then after June 21st – I’m free to withdraw any amount as needed.Thank you for the replies. This board has been extremely helpful in the whole process.2010-04-23 13:45, By: David, IP: [71.233.26.219]

L5: Age 59 1/2Not exactly. You have 2 options either $ 72,000 which is your annual amount, or $ 36,000 which is your prorated amount for 6 months @ $ 6,000/mo.I do not believe that there are any other amounts “up to” $ 72,000 that would be permitted without busting your plan retroactively. It might be possible to take -0-, but I’m not sure.2010-04-23 15:04, By: dlzallestaxes, IP: [173.49.30.37]

L6: Age 59 1/22011 would be a final stub year well after you have met the 5 year requirement. In that situation, you have 3 options prior to 6/21/2011:1) Distribute 72,0002) Distribute nothing since you already met the 5 years and there is no requirement to take a distribution before any particular date in a calendar year.3) Distribute a pro rated amount based on the month. Since the plan ends in June, I believe that the pro rated amount would be 30,000 since May is the last full month of your plan and with the plan ending in June it means that you don’t count June. Also note that the IRS has not been quibbling over whether you include June or not, so you probably could take 30,000 or 36,000. But I think 30,000 is technically correct for a pro rated amount.After 6/21 you can take out whatever amount you wish since your plan has ended and you are over 59.5 so there will be no penalty.2010-04-24 02:55, By: Alan S., IP: [24.116.165.60]