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Early distribution

Last Updated April 17, 2009

Definition

Distributions from qualified plans, 403(b) plans, 457(b) plans, qualified employee annuity plans and IRAs that occur before the retirement account owner reaches age 59 ½. Early distributions are subject to an early distribution penalty, unless an exception applies.  See Early distribution penalty exception .

Referring Cite

IRS § 72(t), Form 5329 and its instructions, IRS Publications 590 and 575

Additional Helpful Information

  • The early distribution penalty applies to 457(b) plans, but only to amounts that are received in a direct transfer or rollover from another type of eligible retirement plan.
  • If a 1099-R does not properly indicate whether the early distribution applies, the participant may file IRS Form 5329 to correct the reporting