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wcooperiv
Level 1

Is a distribution from a foreign pension (lump-sum) subject to IRS early withdrawal penalty?

Qualified for a full pot lump-sum of my UK pension with a protected retirement age in the UK which is 55.  This is a non-qualified IRS plan.  Will claim on US taxes, but is this subject to the IRS early distribution penalty?

2 Replies
Anonymous
Not applicable

Is a distribution from a foreign pension (lump-sum) subject to IRS early withdrawal penalty?

Topic Number 558 - Additional Tax on Early Distributions from Retirement Plans Other Than IRAs

To discourage the use of retirement funds for purposes other than normal retirement, the law imposes an additional 10% tax on certain early distributions from certain retirement plans. The additional tax is equal to 10% of the portion of the distribution that's includible in gross income. Generally, early distributions are those you receive from a qualified retirement plan or deferred annuity contract before reaching age 59½. The term qualified retirement plan means:


A qualified employee plan under section 401(a), such as a section 401(k) plan

A qualified employee annuity plan under section 403(a)

A tax-sheltered annuity plan under section 403(b) for employees of public schools or tax-exempt organizations, or

An individual retirement account under section 408(a) or an individual retirement annuity under section 408(b) (IRAs)


your foreign pension would not be a qualified plan and tthus no early withdrawl penalty.

SweetieJean
Level 15

Is a distribution from a foreign pension (lump-sum) subject to IRS early withdrawal penalty?

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