Age 55 Exception

[bzorc]

A small company terminated its plan in early 2008 and distributed all benefits to the 3 owners, who were the only participants in the plan. None of these owners rolled the distributions over; thus they are taxable in 2008. However, one of the owners turned age 55 during 2008 (the others are over 59 1/2). Is this owner subject to the 10% excise tax, or is he considered "separated from service" for purposes of IRC 72(t)?

Any replies would be appreciated, thanks!

[Guest Sieve]

Termination of a plan is not separation from service.

Did this owner quit? If not, the excise tax exemption does not apply.