Early Withdrawal
Definition Withdrawal that occurs from a certificate of deposit (CD) before the maturity date. An early withdrawal penalty is usually applied to CDs from which early withdrawals
IRA Distributions
Amounts are withdrawn from IRAs. Distributions are included in the recipient’s income unless properly rolled over
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Early distribution penalty exceptions
Definition A condition under which the early distribution penalty is waived. Some exceptions apply to IRAs only, some apply to qualified plans , 457(b) and
Early distribution Penalty
Definition Distributions that occur before the retirement account owner reaches age 59 ½ are subject to an early distribution penalty (or excise tax) of 10%,
Early distribution
Referring Cite IRS § 72(t), Form 5329 and its instructions, IRS Publications 590 and 575 Additional Helpful Information The early distribution penalty applies to 457(b)
Distribution
Definition Amount paid from a retirement plan as a reportable transaction. A distribution can be processed as a direct rollover or paid to the participant.
Substantially Equal Periodic Payment (SEPP) / 72(t) Payments
Definition A series of distributions from a qualified plan, 403(b) arrangement, or IRA, that are made in equal installment payments, over the life expectancy of
IRA
Indirect rollover
Definition A two part transaction, where Part-1 is a distribution and Part 2 is a rollover contribution. The distribution is typically paid to the participant.
Indirect Conversion
Definition A Roth conversion, where the IRA owner takes a distribution from the retirement account that is a Traditional, SEP or SIMPLE IRA (non-Roth IRA)
Nonrecalculation
Definition Method of determining life expectancy used to calculate post-death distributions, where once the life expectancy is determined in the determination year, 1 is subtracted
Nonqualified distribution
Definition A distribution from a Roth IRA or ESA that does not meet the requirements to be treated as a Qualified distribution- ESA or a
