Early Distribution Penalty

[spencer]

Client loses job, cashes in total pension, over 59-1/2, lives in MWD area. TTB 13-23 says the 10% early penalty under Sec 72(t) does not apply. Will that fit this situation (like, I don't know what Sec 72(t) is)? If so, what exception number goes on form 5329 (No. 12 is "other"). Thanks for your help.........Ed

[ChEAr$]

Client loses job, cashes in total pension, over 59-1/2, lives in MWD area. TTB 13-23 says the 10% early penalty under Sec 72(t) does not apply. Will that fit this situation (like, I don't know what Sec 72(t) is)? If so, what exception number goes on form 5329 (No. 12 is "other"). Thanks for your help.........Ed

See the instructions for form 5329 for list of exceptions and the codes.
However, it should be noted that cashing in pension just to pay living expenses is not
an exception.

[DaveO]

You shouldn't need an exception. Just be sure the clients correct birthdate is entered.

[ChEAr$]

You shouldn't need an exception. Just be sure the clients correct birthdate is entered.

Ah, I didn't catch the age in OP; however, just make sure that client was over 59 1/2 at the time OF the distribution; not merely in the same year.

[spencer]

The client is age 28

and lives in a Midwest Disaster Area. TTB 13-23 gave me hope that maybe the penalty didn't apply in this case.
I guess, however, the distribution is not a "qualified disaster recovery assistance distribution" (wording from TTB).
Thanks for your comments.