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Thrift Plan/UPS stock-10 percent tax?
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<blockquote data-quote="JohnnyPension" data-source="post: 145536" data-attributes="member: 7855"><p>Thanks for the info. A few of us are retiring at 55/25 and saw at the IRS site under:</p><p></p><p>401(k) Resource Guide - Plan Sponsors - General Distribution Rules</p><p></p><p>the following:</p><p></p><p>Tax on early distributions. If a distribution is made to a participant before he or she reaches age 59½, the participant may be liable for a 10% additional tax on the distribution. This tax applies to the amount received that the employee must include in income.</p><p></p><p>Exceptions. The 10% tax will not apply if distributions before age 59½ are made in any of the following circumstances:</p><p></p><p>Made to a beneficiary (or to the estate of the participant) on or after the death of the participant.</p><p>Made because the participant has a qualifying disability.</p><p>Made as part of a series of substantially equal periodic payments beginning after separation from service and made at least annually for the life or life expectancy of the participant or the joint lives or life expectancies of the participant and his or her designated beneficiary. (The payments under this exception, except in the case of death or disability, must continue for at least 5 years or until the employee reaches age 59½, whichever is the longer period.)</p><p><span style="color: RoyalBlue">Made to a participant after separation from service if the separation occurred during or after the calendar year in which the participant reached age 55</span>.</p><p>Made to an alternate payee under a qualified domestic relations order (QDRO).</p><p>Made to a participant for medical care up to the amount allowable as a medical expense deduction (determined without regard to whether the participant itemizes deductions).</p><p>Timely made to reduce excess contributions.</p><p>Timely made to reduce excess employee or matching employer contributions.</p><p>Timely made to reduce excess elective deferrals.</p><p>Made because of an IRS levy on the plan., or</p><p>Made on account of certain disasters for which IRS relief has been granted.</p><p></p><p>It is that fourth line down that has us all intrigued. If I took the money out (and Im not really sure if I will) I would put it toward the down payment of my new home in Arizona. This is my second home so it would not help me there. I am going to call the IRS today to see if I can get an answer from them.</p><p></p><p>If you should have any other ideas on this it would be appreciated. Know any good tax men in the east valley near Phoenix? I usually do my own but (Turbo Tax) but I think that this is all over my head. Thanks again.</p><p></p><p>John</p></blockquote><p></p>
[QUOTE="JohnnyPension, post: 145536, member: 7855"] Thanks for the info. A few of us are retiring at 55/25 and saw at the IRS site under: 401(k) Resource Guide - Plan Sponsors - General Distribution Rules the following: Tax on early distributions. If a distribution is made to a participant before he or she reaches age 59½, the participant may be liable for a 10% additional tax on the distribution. This tax applies to the amount received that the employee must include in income. Exceptions. The 10% tax will not apply if distributions before age 59½ are made in any of the following circumstances: Made to a beneficiary (or to the estate of the participant) on or after the death of the participant. Made because the participant has a qualifying disability. Made as part of a series of substantially equal periodic payments beginning after separation from service and made at least annually for the life or life expectancy of the participant or the joint lives or life expectancies of the participant and his or her designated beneficiary. (The payments under this exception, except in the case of death or disability, must continue for at least 5 years or until the employee reaches age 59½, whichever is the longer period.) [COLOR="RoyalBlue"]Made to a participant after separation from service if the separation occurred during or after the calendar year in which the participant reached age 55[/COLOR]. Made to an alternate payee under a qualified domestic relations order (QDRO). Made to a participant for medical care up to the amount allowable as a medical expense deduction (determined without regard to whether the participant itemizes deductions). Timely made to reduce excess contributions. Timely made to reduce excess employee or matching employer contributions. Timely made to reduce excess elective deferrals. Made because of an IRS levy on the plan., or Made on account of certain disasters for which IRS relief has been granted. It is that fourth line down that has us all intrigued. If I took the money out (and Im not really sure if I will) I would put it toward the down payment of my new home in Arizona. This is my second home so it would not help me there. I am going to call the IRS today to see if I can get an answer from them. If you should have any other ideas on this it would be appreciated. Know any good tax men in the east valley near Phoenix? I usually do my own but (Turbo Tax) but I think that this is all over my head. Thanks again. John [/QUOTE]
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