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Am I exempt from the 10% penalty tax?

I am almost 58 years old and just retired from the State of Oregon after 33 years of service. I rolled my (IAP) Individual Account Program into my 457b Program (Oregon Savings Growth Plan) I am planning on starting disbursements next year. Am I exempt from the 10% penalty tax? 

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Accepted Solutions
dmertz
Level 15

Am I exempt from the 10% penalty tax?

Amounts rolled into your 457(b) from are kept in a separate subaccount in your 457(b).  While distributions from the regular account are not subject to any early-distribution penalty, distributions from the separate rollover subaccount are subject to an early-distribution penalty unless an exception applies.  Separating from service in or after the year in which you reach age 55 would be one such exception.  Contact the plan administrator for details.

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3 Replies
dmertz
Level 15

Am I exempt from the 10% penalty tax?

Amounts rolled into your 457(b) from are kept in a separate subaccount in your 457(b).  While distributions from the regular account are not subject to any early-distribution penalty, distributions from the separate rollover subaccount are subject to an early-distribution penalty unless an exception applies.  Separating from service in or after the year in which you reach age 55 would be one such exception.  Contact the plan administrator for details.

MinhT
Expert Alumni

Am I exempt from the 10% penalty tax?

Distributions from your 457(b) plan are exempt from the early withdrawal tax penalty only after age 59 1/2. It does not matter whether you are retired or not.

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ascdrew
Returning Member

Am I exempt from the 10% penalty tax?

My understanding is that retired peace officers can withdrawl from their 457(b) plan once retired at any age without the 10% tax penalty.  Am I mistaken?  In my scenario, I'm looking at retiring at age 48.75 after 28 years.  If I started taking dispursements/withdrawls, would I be subject to the 10% penalty in addition to ordinary income tax on those funds I take out?  

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