retire during the year you turn 55

L1: retire during the year you turn 55I’ve seen many times on this forum the special exception about withdrawals before reaching age 59.5 stated as:
If you retire during the year that you turn 55, then withdrawals from this type plan is exempt from the 10% early withdrawal penalty.
I’ve never really looked into this exception and I have a question regarding its application:
Is this exception only available to the individual in the year that s/he retires or can it be used anytime between age 55 and 59.5?2006-01-23 18:59, By: John, IP: [69.15.132.9]

L2: retire during the year you turn 55It applies for any distributions from the plan beginning after separation from service, no matter how much later. The separation must occur no earlier than the year of the 55th birthday. Of course, this exception loses some practical value if the plan does not allow partial distributions, because if too much is taken out in one year, the marginal rate tax hit could be much worse than the 10% you are trying to avoid. In the past most plans would not allow partials, but more of them now want to retain assets to keep the management fees for the investments under control. But if the plan does allow partials, this would replace the need to set up a SEPP and abide by all the rules.2006-01-23 20:26, By: Alan S., IP: [24.116.165.157]

L2: retire during the year you turn 55Alan,
Thanks for a little description and the answer to my question.
Now:
> It applies for any distributions from the plan beginning after separation from service
When you say “plan” I assume you are talking about the original company plan, whether it be 401k or otherwise. What if the assets have been removed from this “plan” and put into another IRA, does that invalidate the exclusion?
What and were is the source document that defines this exclusion?2006-01-23 23:36, By: John, IP: [69.15.132.9]

L2: retire during the year you turn 55Look for the exceptions to 72(t)…
72(t)(2)(A)(v) made to an employee after separation from service after attainment of age 55,
The exception applies to employer sponsored plans, not to funds that are in an IRA – regardless of the source.
Look in the top menu for 72(t) SEPP Plans and then look for either of the ‘Exceptions’ or ‘Section 72’ links.2006-01-24 04:38, By: Gfw, IP: [172.16.1.77]