Withdrawal from 401k – over 55 – after sep from serv.
I have a 57 year old client that took a large distribution from her 401k early in the year and then retired later in the same year from her company. I know that the 72(t)(2) exception is for distributions [b]after [/b]separation from service. Is anyone aware of any rulings or other guidance on whether that exception might apply if the distribution is [b]in the year [/b]of separation from service and the individual is over 55??
Permalink Submitted by Alan Spross on Sat, 2008-06-14 00:15
No rulings that I am aware of assist with the stated situation. There have been rulings allowing distributions “DUE TO” separation from service to be taken much later than the actual separation date, but none that accelerate the date due to perhaps some anticipation of a pending separation.
The age 55 exception also applies to separation in the year the employee turns 55 even if it occurs several months prior to the actual birthday. But in that case also, the distribution must follow the separation date.