Surviving Spouse rollover from 401(k) Plan to IRA

[blue]

Our special tax notice states "The 10% penalty does not apply to death benefit distribution to a surviving spouse under age 59 1/2. However, if you roll over the death benefit, the taxable portion of any distribution from your IRA or eligible employer plan before you reach age 59 1/2 is subject to a 10% penalty tax in addition to federal income taxes unless an exception applies”.

Does anyone know what the exceptions are?

[GMK]

The exceptions are the same ones that apply to your plan and generally include payments that are:

paid after you separate from service with your employer during or after the year you reach age 55,

paid because you retire due to disability,

paid to your beneficiary if you die,

paid in a direct rollover, including a direct rollover to a Roth IRA,

piad to certain reservists on active duty,

paid to an alternate payee under a qualified domestic relations order,

dividends paid with respect to stock by an ESOP,

paid as equal (or almost equal) payments over your life or life expectancy (or your and your beneficiary's lives or life expectancies),

paid directly to the governmnet to satisfy a federal tax levy, or

less than the amount of your deductible medical expenses.

[QDROphile]

"paid after you separate from service with your employer during or after the year you reach age 55"

This one does not apply, but distributions of substantially equal payments after age 55 will avoid the penalty. Get help before doing it, important details apply.

Some of the other items listed above either obviously do not apply to IRAs and some have an IRA twist (e.g. qualified domestic relations orders have an IRA counterpart).

Best to get the IRS publications 575 and 590, available on line.

[Appleby]

See http://www.retirementdictionary.com/earlyd...tyexception.htm, which includes links to Pubs 590 and 575