Can anyone provide me a site I could use to provide a client as to when the early distribution penalty applies. My understanding is that is is the date the participant ACTUALY attains age 591/2 not the calendar year which they turn 59 1/2

IRC 72(t).

It's also clarified in IRS Pub 590 (for IRAs). The most recent version I have is for 2005 returns, and on page 49 it states:

"After you reach age 59½, you can receive distributions without having to pay the 10% additional tax."

Hope this helps.

The 2006 Pension Answer Book, Q16.4, asks "what does age 59 1/2 mean"?. It answers "Although there is no provision defining age 59 1/2, it is believed that it means the actual date on which the employee attains age 59 1/2" So, if no exception applies, if someone receives a distribution before the date that is 182.5 days after their 59th birthday, it seems they get a 10% penalty.

Why is it 59 and a HALF? Why not just 59? Or 60? Why screw around with this half-year crap?

b/c 59 1/2 was the date selected by congress for penalty free distributions from HR-10 plans for self employed persons in 1962.

And that was undoubtedly a compromise between competing factions--a concept that was carried over to the beginnings of ERISA. As I recall (oops--as my dad told me) one side wanted the IRS in charge, and the other watned the DOL--voila, lets put them both in charge.