TSA Distributions…
Penalty free distributions from TSA’s are available at age 55 or 59 1/2? I know 401(k)’s are age 55, but sure on TSA’s.
Penalty free distributions from TSA’s are available at age 55 or 59 1/2? I know 401(k)’s are age 55, but sure on TSA’s.
Permalink Submitted by Joseph Arsenault on Wed, 2009-06-17 17:45
Yes
This is available for qualified, 403(b) and government plans. IRAs are the plans that do not fall under this exception. For some government plans the age is actually 50 now (following the 06 PPA).
It is important to note that if you rollover the distributions to an IRA, the 10% penalty will apply until the owner is 59 1/2.
-J
Permalink Submitted by Alan Spross on Wed, 2009-06-17 23:20
The penalty waiver applies to separation from service in the year age 55 is attained or later from the plan of that employer only. If the TSA allows in service distributions, then the penalty would still apply up to age 59.5. This was probably assumed to be the case, but wanted to button this up somewhat.
Employees are frequently asked by brokers and various investment advisors to complete the rollover to an IRA, and then begin a 72t plan to eliminate the early withdrawal penalty. In cases where the plan does not offer flexible distributions this may be wise, but in other cases the recommendation is done either without realizing the age 55 rule exists, OR simply to get management control of the funds for commission purposes.