Early distribution

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