Guide to the Early Distribution Penalty Exceptions for Distributions from Retirement Accounts (IRA6)

Instructor(s): Denise Appleby, APA, CISP, CRPS, CRC, Mike Tucker, Ph.D., LL.M., J.D., CPA

CPE Credits: 2

Register here : https://www.surgentcpe.com/cpe-courses/Retirement-Account-Early-Distribution-Penalty-Exceptions-IRA6

Overview

Distributions from retirement accounts that occur before the account owner reaches age 59½ are subject to a 10% additional tax, unless an exception applies. Eligibility for any of these exceptions is determined by several factors, including the type of account from which the distribution is made. Making a wrong move can result in a retirement account owner losing eligibility for an exception. In some cases, exceptions can only be claimed through proper reporting on the individual's tax return.

Major Topics:

• Early distribution penalty
• Exceptions to the age 59½ rule
• Substantially equal periodic payments
• Exceptions by plan/account type
• Transfer and rollover rules and their effects on qualifications for the exceptions
• Claiming the exception when an IRA custodian's tax reporting shows no exception
• The rules that apply to the different exceptions

Learning Objectives

• Identify distributions that might be subject to the 10% early distribution penalty
• Ensure that clients who qualified for the exceptions do not pay the 10% early distribution penalty because of conflicting tax reporting by IRA custodians and plan trustees
• Understand the tax reporting requirements that apply to early distributions
• Determine suitability for the substantially equal periodic payment program

Designed for:

Financial advisors, tax professionals, and individuals who support IRAs and employer plans (employees of financial institutions who answers questions about and handle transactions for IRAs and employer plans)

Prerequisite:

A basic understanding of individual income tax

Advanced Preparation:

None