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Distribution to corporation owner


Guest Dook

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An individual is a 100% owner of a corporation. He retired a year ago when he was 55 and stopped earning income through the corporation. The corporation still exists so that he can retain some group insurance benefits. The corporation maintains a profit sharing plan in which he and 1 other person have account balances.

The question is; If the corporation now terminates the profit sharing plan, can he take some of his account balance out as taxable income without incurring the 10% penalty since he "terminated employment" when he was 55. The remaining amount of his account balance will be rolled to an IRA.

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