In Uncategorized on 03/15/2021 at 16:11

We’ve heard a lot about 401(k) to IRA rollovers. And we’ve also heard a lot about the Law of the Fifty and Five (see my blogpost “Exempt from the Law of the Fifty and Five,” 4/20/20). The Law of the Fifty and Five (that’s Section 72(t)(2)(A)(v) to you) says a distribution from a 401(k), taken by an employee at or after age fifty-five upon separation from the employer, is exempt from the 10% Section 72(t) whatever-it-is.

Well, John Catania, 2021 T. C. Memo. 33, filed 3/15/21, rolled over his 401(k) into his trad IRA when he retired from his employment at the age of fifty-five. But John was under the age of 59-1/2, when he took the distribution at issue from his trad IRA a couple years later (hi, Judge Holmes).

Judge Vasquez has the bad news for John. He gets rolled under.

“On brief petitioner suggests that the section 72(t)(2)(A)(v) exception should apply to the distribution at issue because he was 55 years old when he retired from Home Depot. As stated above, section 72(t)(2)(A)(v) is not applicable to premature IRA distributions. See sec. 72(t)(3)(A). Although petitioner had a section 401(k) plan when he worked for Home Depot, he transferred the funds from that account to a traditional IRA at Vanguard in 2014. Because he withdrew the distribution at issue from a traditional IRA in 2016, section72(t)(2)(A)(v) does not apply.” 2021 T. C. Memo. 33, at p. 5.

And there are no equitable exceptions.


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