Question: I am a police officer and I am 51 years old. I would like to start taking withdrawals from my pension plan. I also have an individual retirement account (IRA). Am I subject to the 10% early distribution penalty since I am not 59 ½? Answer: Generally, the amounts an individual withdraws from an IRA or retirement plan before reaching age 59½ are called ”early” or ”premature” distributions. Individuals must pay an additional 10% early withdrawal penalty and report the amount to the IRS for early distributions, unless an exception applies. There are a number of exceptions to this penalty, some applicable to IRAs and others to pension type retirement plans. The IRS provides an exception to the 10% early distribution penalty for withdrawals from retirement plans for persons who separate from service at age 55 or older. But another exception is available for public safety officials who are at least 50 years old. State and local policemen, firemen, EMS workers, and other public safety officials who separate from service at age 50 or older, are exempt from the 10% early distribution penalty. However, the exception applies only to distributions from government-sponsored defined benefit plans (e.g., pension plans). The exception is not available for distributions from IRAs or from other plans. Comment: Public safety officials also include federal public safety workers, such as most customs officials, border protection officers and air traffic controllers. If you have any questions or would like more information please contact Steve Shane at: firstname.lastname@example.org | 301.575.0313.
ABOUT STEVE SHANE
Steve Shane provides strategic counseling to clients in need of estate administration, charitable giving and business continuity planning while minimizing estate, gift, and generation-skipping transfer tax exposure. He offers legal guidance to clients on asset protection and the proper disposition of assets in accordance with the client’s objectives, while employing tax planning techniques such as the use of irrevocable trusts, life insurance planning, lifetime gifts and charitable trust. He is also experienced with drafting documents for business planning, the incorporation and application for exemption for Private Foundations and the administration of decedents’ estates. You can also connect with Offit Kurman via Facebook, Twitter, Google+, YouTube, and LinkedIn.
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