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Is there a penalty for receiving an early of a pension at age 56? I terminated at age 40 and received lump sum this year at age 56.

Forum|Forum|7 years ago
June 5, 2019
3 replies
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It was a standard, company pension and I was eligible to start receiving monthly benefits because I was over 55 1/2. I left this employer in 2000 and received the lump sum in 2017.

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Best answer by dmertz

You do not qualify for the age-55 exception because you separated from service before the year that you reached age 55.

You do not qualify for the exception for a series of substantially equal periodic payments because you received a lump-sum buy-out of your pension, not a series of payments for life.

Other penalty exceptions for distributions from a qualified retirement plan are listed on the following IRS web page, but are less common than the ones listed above that you already do not qualify for:

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

DoninGA

Employee

What is the code in box 7 of the Form 1099-R?

M

mudkatmarkAuthor

The code in box 7 is 1.

D

dmertzAnswer

Employee

You do not qualify for the age-55 exception because you separated from service before the year that you reached age 55.

You do not qualify for the exception for a series of substantially equal periodic payments because you received a lump-sum buy-out of your pension, not a series of payments for life.

Other penalty exceptions for distributions from a qualified retirement plan are listed on the following IRS web page, but are less common than the ones listed above that you already do not qualify for:

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