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June 1, 2019
Question

Under age 59 1/2, Form 1099-r ESOP plan was terminated, reaching benefits leaving employee. Identify this plan & reason why I'm exempt to pay additional tax.

  • June 1, 2019
  • 1 reply
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The company was sold my ESOP had an open window of choice to distribute or roll over to an IRA. As I'm completing my 1099-r it's asking me to identify the plan which I'm not sure if this is a qualified plan. What reason is acceptable for no early withdraw penalty do no additional tax would apply.

1 reply

Employee
June 1, 2019

The ESOP is a qualified plan.

The following IRS web page lists the possible exceptions to the early-distribution penalty (the "additional tax"):

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

If you rolled the entire amount over to a traditional account in another retirement plan, there is no tax or penalty.