turbotax icon
turbotax icon
turbotax icon
turbotax icon
cancel
Showing results for 
Search instead for 
Did you mean: 
Announcements
Close icon
Do you have a TurboTax Online account?

We'll help you get started or pick up where you left off.

davisnj12
New Member

I worked for a company that was sold to another company. Can I take my pension from the original company without a tax penalty since it is considered a termination?

 
Connect with an expert
x
Do you have an Intuit account?

Do you have an Intuit account?

You'll need to sign in or create an account to connect with an expert.

3 Replies
dmertz
Level 15

I worked for a company that was sold to another company. Can I take my pension from the original company without a tax penalty since it is considered a termination?

Termination of the plan is not an exception to the early-distribution penalty.

 

Exceptions to the early-distribution penalty:

https://www.irs.gov/retirement-plans/plan-participant-employee/retirement-topics-tax-on-early-distri...

 

Presumably this is a qualified retirement plan.  If termination of the plan results in a distribution to you, you can roll the distribution over to an IRA to continue to defer the income and avoid an early-distribution penalty.

Anonymous
Not applicable

I worked for a company that was sold to another company. Can I take my pension from the original company without a tax penalty since it is considered a termination?

if you  have reached the age of  59 1/2 , then there is no early withdrawal penalty.  however, you will pay income taxes unless you put the money into an IRA or other qualified plan. Maybe roll it into the new company's plan, if possible. if not, the best way to avoid income tax issues is to do a direct rollover to an IRA or other qualified plan.   if you get the cash, you have 60 days to put it into a qualified plan.    

TomD8
Level 15

I worked for a company that was sold to another company. Can I take my pension from the original company without a tax penalty since it is considered a termination?

Consult your plan administrator to see if your situation is considered a "separation from service."

If the plan is a 401K, it is an exception to the 10% penalty if the employee separates from service during or after the year the employee reaches age 55 (age 50 for public safety employees of a state, or political subdivision of a state, in a governmental defined benefit plan).

See Separation from Service in this IRS reference:

https://www.irs.gov/retirement-plans/plan-participant-employee/retirement-topics-tax-on-early-distri...

 

 

 

**Answers are correct to the best of my ability but do not constitute tax or legal advice.
Use your Intuit Account to sign in to TurboTax.
By selecting Sign in, you agree to our Terms and acknowledge our Privacy Statement.
message box icon

Get more help

Ask questions and learn more about your taxes and finances.

Post your Question
Manage cookies