Distributions for Terminated Participants of SIMPLE plans

[Guest Peck]

Are there any limitations to distributions for terminated participants of SIMPLE IRA or SIMPLE 401(k) plans?

[Gary Lesser]

Distributions under SIMPLE 401(k) plans are governed by the terms of the particular 401(k) plan. In a SIMPLE IRA, amounts withdrawn before age 59.5, generally, would be subject to a premature distribution penalty of 20 percent (rather than the normal 10%) during the first two years that the SIMPLE IRA plan was in existance. If over 59.5 (or one of the other exceptions apply), amounts in a SIMPLE IRA may be withdrawn (subject to tax) at any time without penalty (10% or 20%). Hope this helps.

[Guest TJG]

Isn't the penalty tax increased to 25% for distributions during the first 2 years?

[Guest Sharon]

Is there any distribution advantage with a SIMPLE IRA versus a SIMPLE plan?