When is a 401k Distribution Not Subject to the
There are only a couple of situations where the
IRS will waive the 10% 401k early withdrawal penalty, i.e., a
withdrawal prior to the participant reaching age 59½.
Amount of your unreimbursed medical expenses
greater than 7.5% AGI ( IRC §72(t)(2)(B) ).
There is a Qualified domestic Relations
Order (QDRO) from the courts that mandate funds from your
account go to a former spouse, child, or dependent ( IRC
You have separated from service and were at least 55 years
of age when you did so (or separated from service in the
year in which you turned 55) ( IRC §72(t)(2)(A)(v) and
You have elect a Section 72(t) distribution.
You are totally disabled. (The key to the
disability exception seems to lie in the permanence of the
condition, not the severity. Therefore, to claim this
exemption you have to furnish not only information proving
that you are totally disabled, but also information on the
permanence of the disability.) ( IRC §72(t)(2)(A)(iii) )
You have died and your beneficiary gets the
money ( IRC §72(t)(2)(A)(ii) ).
You have made contributions under special
automatic enrollment rules that are withdrawn pursuant to
your request within 90 days of enrollment ( IRC
Certain distributions to qualified military
reservists called to active duty (IRC §72(t)(2)(G) )
Because of an IRS levy of the plan ( IRC
SOURCE: 401k Help Center
For Professional Consultation Services Contact:
Executive Benefit Plans, Inc.
1186 Route 56 East
Apollo, PA 15613-9725 USA
Phone: 800-622-2411 or Fax: 724-478-1688
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This page was last reviewed and/or updated
Friday, July 03, 2015 05:21 PM