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Simple Distribution Rules


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Guest Bob K

There is no such rule.

The 2 year rule you speak of is applicable to SIMPLE IRAs only AND increases the additional tax for early distributions to 25% for the first two years the account is open. Distributions can be made but have to individual needs to pay the additional tax.

The SIMPLE 401(k) plan is subject to the distribution rules for qualified plans. The plan document itself will contain the distributable events. The 25% additional tax does NOT apply.

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Bob,

The two-year period begins on the first day on which contributions are deposited in the individual's SIMPLE IRA, which could be after the account was opened. [Notice 97-6, Q & A I-5]; [iRS Notice 98-4, 1998-2 IRB 26, Q&As I-2–I-5]

Life and Death Planning for Retirement Benefits by Natalie B. Choate
https://www.ataxplan.com/life-and-death-planning-for-retirement-benefits/

www.DeniseAppleby.com

 

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