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huahua42
New Member

I started drawing my pension at 55, I’m being asked if I drew early and now taxed at 10% or not? I’m at the 59 1/2 , but have been drawing pension for last several years

 
2 Replies

I started drawing my pension at 55, I’m being asked if I drew early and now taxed at 10% or not? I’m at the 59 1/2 , but have been drawing pension for last several years

If you are at least 55 years old when you leave your job, you will not have to pay an early distribution tax on any distribution you receive from your former employer's retirement plan. ... After age 59 1/2, the early distribution tax does not apply to any retirement plan distribution.

DawnC
Employee Tax Expert

I started drawing my pension at 55, I’m being asked if I drew early and now taxed at 10% or not? I’m at the 59 1/2 , but have been drawing pension for last several years

If you were paying the 10% penalty, then you can answer Yes to that question.   If you were taking the Separation from Service exception, and not paying the early withdrawal penalty, you can answer No.  

 

Most retirement plan distributions are subject to income tax and may be subject to an additional 10% tax.   Generally, the amounts an individual withdraws from an IRA or retirement plan before reaching age 59½ are called ”early” or ”premature” distributions. Individuals must pay an additional 10% early withdrawal tax unless an exception applies.   Separation from service after age 55 is one of the exceptions.  

 

The early withdrawal 10% penalty does not apply distributions made from qualified plans to an employee after separation from service after attainment of age 55. 

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