List of 72t Exceptions to the 10% Tax
The table below is a quick view of all 72t exceptions to the 10% tax. You can read the text of the code at the Cornell Legal Information Institute site:
https://www.law.cornell.edu/uscode/text/26/72.
| Except as provided in paragraphs (3) and (4), paragraph (1) shall not apply to any of the following distributions: | |
| (A) In general Distributions which are— | |
| 72(t)(2)(A)(i) Age 59 1/2 | Made on or after the date on which the employee attains age 59½, |
| 72(t)(2)(A)(ii) Death | Made to a beneficiary (or to the estate of the employee) on or after the death of the employee, |
| 72(t)(2)(A)(iii) Disability | Attributable to the employee’s being disabled within the meaning of subsection (m)(7), |
| 72(t)(2)(A)(iv) Substantially Equal Periodic Payments (SEPP) | Part of a series of substantially equal periodic payments (not less frequently than annually) made for the life (or life expectancy) of the employee or the joint lives (or joint life expectancies) of such employee and his designated beneficiary, |
| 72(t)(2)(A)(v) Age 55 (Qualified Retirement Plans only) | Made to an employee after separation from service after attainment of age 55, [in other words, the employee can use this exception if s/he separated from service during the year s/he turned 55, or anytime thereafter] |
| 72(t)(2)(A)(vi) Dividends (ESOP only) | Dividends paid with respect to stock of a corporation which are described in section 404(k), |
| 72(t)(2)(A)(vii) Levy | Made on account of a levy under section 6331 on the qualified retirement plan, or |
| 72(t)(2)(A)(viii) Annuity | Payments under a phased retirement annuity under section 8366a(a)(5) [3] or 8412a(a)(5) of title 5, United States Code, or a composite retirement annuity under section 8366a(a)(1) [3] or 8412a(a)(1) of such title. |
| 72(t)(2)(A)(ix) 408(d)(4) distributions | Attributable to withdrawal of net income attributable to a contribution which is distributed pursuant to section 408(d)(4). |
| 72(t)(2)(B) Medical expenses | Distributions made to the employee (other than distributions described in subparagraph (A), (C), or (D)) to the extent such distributions do not exceed the amount allowable as a deduction under section 213 to the employee for amounts paid during the taxable year for medical care (determined without regard to whether the employee itemizes deductions for such taxable year). |
| 72(t)(2)(C) Divorce or QDRO | Any distribution to an alternate payee pursuant to a qualified domestic relations order (within the meaning of section 414(p)(1)). |
| 72(t)(2)(D) Health Insurance premiums | If such individual has received unemployment compensation... |
| 72(t)(2)(E) Higher Education expenses | Distributions to an individual from an individual retirement plan to the extent such distributions do not exceed the qualified higher education expenses (as defined in paragraph (7)) of the taxpayer for the taxable year. Distributions shall not be taken into account under the preceding sentence if such distributions are described in subparagraph (A), (C), or (D) or to the extent paragraph (1) does not apply to such distributions by reason of subparagraph (B). |
| 72(t)(2)(F) First Home purchases | Distributions to an individual from an individual retirement plan which are qualified first-time homebuyer distributions (as defined in paragraph (8)). Distributions shall not be taken into account under the preceding sentence if such distributions are described in subparagraph (A), (C), (D), or (E) or to the extent paragraph (1) does not apply to such distributions by reason of subparagraph (B). |
| 72(t)(2)(G) Individuals called to active duty | Any qualified reservist distribution. |
| 72(t)(2)(H) Distributions from retirement plans in case of birth of child or adoption | Any qualified birth or adoption distribution. The aggregate amount which may be treated as qualified birth or adoption distributions by any individual with respect to any birth or adoption shall not exceed $5,000. |
| 72(t)(2)(L) Terminal Illness | Distributions which are made to the employee who is a terminally ill individual on or after the date on which such employee has been certified by a physician as having a terminal illness. |
| 72(t)(2)(M)Distributions in connection with federally declared disasters | Any qualified disaster recovery distribution. |