401K withdrawl

[gilgonsalves]

What is the name of your state? MA
I turn 59 in April of 2008 and 59 1/2 in October of 2008. My question is can take money out of my 401K without tax penalty any time during 2008 (since that is the year I turn 59 1/2) or do I have to wait until I actually turn 59 1/2 in October?
thanks in advance for your help

 

[tecate]

This is from Section 72(t)


(t) 10-percent additional tax on early distributions from qualified retirement plans
(1) Imposition of additional tax
If any taxpayer receives any amount from a qualified retirement plan (as defined in section 4974 (c)), the taxpayer’s tax under this chapter for the taxable year in which such amount is received shall be increased by an amount equal to 10 percent of the portion of such amount which is includible in gross income.
(2) Subsection not to apply to certain distributions
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—
(i) made on or after the date on which the employee attains age 591/2,

 

[LdiJ]

What is the name of your state? MA
I turn 59 in April of 2008 and 59 1/2 in October of 2008. My question is can take money out of my 401K without tax penalty any time during 2008 (since that is the year I turn 59 1/2) or do I have to wait until I actually turn 59 1/2 in October?
thanks in advance for your help

You have to wait until you actually turn 59 1/2. You also need to make sure that the payer puts the proper distribution code on the 1099 R.

 

[Pub590]

There are several exceptons to the 10% early distribution tax on pension plans if you withdraw an amount and if you are under age 59 1/2. One of these exceptions is if you left your employer in the year you turn 55 or later you would meet the exception. If you meet this exception and you get a 1099-R with a distribution code 1 then you would need to file out Form 5329 to show the exception. Pub575 from the IRS lists all the exceptions to the early withdraw penalty.