1099R bx7 code 1, but the business folded

[Possi]

It hardly seems right that my client's newspaper closed down (a journalist) and he had to take his money out of the retirement, then is hit with an early distribution penalty.

Is the logic that since he is only 47 years old he should have rolled it over into another retirement account?

Or is there an exception I am not interpreting correctly?

Bad enough the newspaper folded... ya know? This adds insult to injury. I know life's not fair...

[taxea]

The logic is that he should have had a cash emergency fund so he would not have to use the retirement. The only thing I can think of is if he is allowed to take the funds without penalty due to separation from the employment.

[Gretel]

It hardly seems right that my client's newspaper closed down (a journalist) and he had to take his money out of the retirement, then is hit with an early distribution penalty.

Is the logic that since he is only 47 years old he should have rolled it over into another retirement account?

Or is there an exception I am not interpreting correctly?

Bad enough the newspaper folded... ya know? This adds insult to injury. I know life's not fair...

He is too young for any exception to apply but I would be happy to learn any different. I agree, these are heart breaking tax returns to do.

[Larmil]

He is too young for any exception to apply but I would be happy to learn any different. I agree, these are heart breaking tax returns to do.

Unfortunately, tax law has no heart - been there, done that.

[Possi]

Not 55

The logic is that he should have had a cash emergency fund so he would not have to use the retirement. The only thing I can think of is if he is allowed to take the funds without penalty due to separation from the employment.

I looked at that, and for any other one having to do with separation of service, and he had to be 55 to get the exception.

[Possi]

unfair, yes...

... and I know, that's life.

This tax year seems to be harder on my clients than in years past. Refunds are much smaller. So many out of work, too.