10% Early Penalty

[Donanita]

Client retired on disability. Wants to roll their thrift plan into a IRA. Under 591/2 does the exception for a distrubtion apply for a IRA. I know the thrift plan will but not sure about a IRA

[Bird Legs]

10% early withdrawal penalty

Exception to penalty: You may take a distribution due to disability only if the disability renders you
unable to engage in any substantial gainful activity and it is medically determined that the condition will last continuously for at least 12 months or lead to your death. You may
be required to furnish proof of disability, in a form acceptable to the Trustee or
Custodian, verifying your ability to use this distribution penalty exception. Distributions
are reported on IRS form 1099R using code 3.

[veritas]

another point

If the taxpayer has reached age 55 at time of seperation the taxpayer can withdraw from the thrift plan without penalty.

[Donanita]

Ira

If the taxpayer has reached age 55 at time of seperation the taxpayer can withdraw from the thrift plan without penalty.

Client is 55 but wants to roll his thrift plan to a IRA and draw the interest. Doesn't want to do the T Plan ( equal payments for 5 yr) as this would have him drawing payment past age 60. Wants to draw the interest off the IRA by bypass the 10% penalty.

[Bees Knees]

Once it is rolled over into an IRA, it becomes an IRA. You can't take penalty free distributions until 59 and 1/2.

[veritas]

He can withdraw money from the thrift plan now without penalties. the taxpayer can tell the thift plan to send monthly whatever amount he wants. There is an option probably to annuitize the thrift plan but I would not do that if it was me.