Most retirement plan distributions are subject to income tax and may be subject to an additional 10% tax. * Generally, the amounts an individual withdraws from an IRA or retirement plan before reaching age 59½ are called "early" or "premature" distributions. Individuals must pay an additional 10% early withdrawal tax unless an exception applies. Use Form 5329 to report distributions subject to the 10% additional tax on early distributions from a qualified retirement plan, including traditional IRAs. If you received a distribution that meets an exception, but box 7 on Form 1099-R doesn’t show an exception, use Form 5329 to indicate the correct exception. Exceptions to the 10% additional tax Exception The distribution will NOT be subject to the 10% additional early distribution tax in the following circumstances: Qualified plans (401(k), etc.) IRA, SEP, SIMPLE IRA* and SARSEP plans Internal Revenue Code section(s) Age after participant/IRA owner reaches age 59½ yes yes 72(t)(2)(A)(i) Automatic enrollment permissive withdrawals from a plan with auto enrollment features yes yes for SIMPLE IRAs and SARSEPs 414(w)(1)(B) Birth or adoption distributions up to $5,000 per child for qualified birth or adoption expenses yes yes 72(t)(2)(H) Corrective distributions corrective distributions (and associated earnings) of excess contributions, excess aggregate contributions and excess deferrals, made timely yes n/a 401(k)(8)(D), 401(m)(7)(A), 402(g)(2)(C) Death after death of the participant/IRA owner yes yes 72(t)(2)(A)(ii) Disability total and permanent disability of the participant/IRA owner yes yes 72(t)(2)(A)(iii) Disaster recovery distribution up to $22,000 to qualified individuals who sustain an economic loss by reason of a federally declared disaster where they live yes yes 72(t)(2)(M), 72(t)(11) Domestic abuse victim distribution to a victim of domestic abuse by a spouse or domestic partner, up to the lesser of $10,000 or 50% of account (distributions made after 12/31/2023) yes yes 72(t)(2)(K) Domestic relations to an alternate payee under a Qualified Domestic Relations Order yes n/a 72(t)(2)(C) Education qualified higher education expenses no yes 72(t)(2)(E) Emergency personal expense one distribution per calendar year for personal or family emergency expenses, up to the lesser of $1,000 or vested account balance over $1,000 (made after 12/31/2023) yes yes 72(t)(2)(I) Emergency savings account distributions from a pension-linked emergency savings account (made after 12/31/2023) yes n/a 402A(e)(7) Equal payments series of substantially equal payments yes yes 72(t)(2)(A)(iv) ESOP dividend pass through from an ESOP yes n/a 72(t)(2)(A)(vi) Homebuyers qualified first-time homebuyers, up to $10,000 no yes 72(t)(2)(F) Levy because of an IRS levy of the plan yes yes 72(t)(2)(A)(vii) Medical amount of unreimbursed medical expenses (>7.5% AGI) yes yes 72(t)(2)(B) 213(a) Medical health insurance premiums paid while unemployed no yes 72(t)(2)(D) Military certain distributions to qualified military reservists called to active duty yes yes 72(t)(2)(G) Returned IRA contributions if withdrawn by extended due date of return, not including earnings on these returned contributions n/a yes 408(d)(4) Rollovers in-plan Roth rollovers or eligible distributions contributed to another retirement plan or IRA within 60 days (also see FAQs: Waivers of the 60-day rollover requirement) yes yes 402(c), 402A(d)(3), 403(a)(4), 403(b)(8), 408(d)(3), 408A(d)(3) Separation from service the employee separates from service during or after the year the employee reaches age 55 (age 50 for public safety employees of a state, or political subdivision of a state, in a governmental defined benefit or defined contribution plan) ** yes no 72(t)(2)(A)(v), 72(t)(10) Terminal illness distributions made to a terminally ill employee, on or after the date the employee has been certified by a physician as having a terminal illness yes n/a 401(k)(2)(B)(i)(I) Unemployed health insurance distributions equal to the amount paid for family health insurance by an individual who was unemployed for 12 weeks and received unemployment compensation in the year of the distribution or the subsequent year n/a yes 72(t)(2)(D) * Retirement plans: The 10% additional tax generally applies to early distributions from qualified plans, 403(a) or (b) annuity plans and traditional IRAs, including IRAs that are connected to a SIMPLE IRA or SEP plan maintained by an employer. Qualified plans include traditional pension plans, cash balance plans, 401(k) plans and profit-sharing plans, among others. Distributions from a governmental 457(b) plan are not subject to the 10% additional tax except for distributions attributable to rollovers from another type of plan or IRA. SIMPLE IRA: Distributions made from a SIMPLE IRA plan within the first 2 years of participation incur a 25% additional tax instead of 10%. ** Qualified public safety employees: The separation from service exception for public safety employees who are age 50 or over also includes specified federal law enforcement officers, corrections officers, customs and border protection officers, federal firefighters, private-sector firefighters, and air traffic controllers. An exemption is allowed for distributions from defined benefit plans, defined contribution plans or other types of governmental plans, such as the TSP. See IRC Section 72(t)(10). This exemption also applies to private-sector firefighters.
