Exeption to 10% Penalty on Early Retirement Distribution

[Maria]

Hello,

I have a client who used to be a Union worker. After 25 years of service he retired from the Union. After he retired he started to take out pension distribution from the Union on weekly basis. He rollover the annuity portion since he was told by the human resource person that 10% penalty applied to the annuity portion but no the pension portion. He was only 46 years old when he took out the pension distribution. Form 1099-R shows distribution code "7." Is that true that he is not subject to the 10% penalty on pension distribution from the plan held by the Union?

Thanks very much.

[ChEAr$]

Hello,

I have a client who used to be a Union worker. After 25 years of service he retired from the Union. After he retired he started to take out pension distribution from the Union on weekly basis. He rollover the annuity portion since he was told by the human resource person that 10% penalty applied to the annuity portion but no the pension portion. He was only 46 years old when he took out the pension distribution. Form 1099-R shows distribution code "7." Is that true that he is not subject to the 10% penalty on pension distribution from the plan held by the Union?

Thanks very much.

I don't see any problem. If 25 years is normal retirement age, then the code 7 is correct.
Some law enforcement groups also have 20 years, 25, maybe, as normal retirement ages.

[Lion]

Equal Distributions

...and, any age if substantially equal distributions for life, which I think is actually defined as the greater of five years or age 59.5! But, don't trust me on that.

[taxea]

TTB pg 13-3