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Post Date:  7/2/2015
Last Updated:  7/2/2015

Summary
Cross References
- Public Law 114-26
- IRC §72(t)(10)(B)

In general, IRC section 72(t)(1) imposes a 10% penalty on the distribution from a qualified retirement plan or IRA if the taxpayer has not yet attained the age of 591/2. There are numerous exceptions to this early distribution penalty. One exception is for a distribution to a qualified public safety employee in a government plan. Under this exception, the 10% penalty does not apply to a public safety employee who has separated from service after attaining the age of 50.

The definition of "public safety employee" for purposes of this 10% penalty exception means any employee of a state or political subdivision of a state who provides police protection, firefighting services, or emergency medical services for any area within the jurisdiction of such state or political subdivision.

New Law: Under the new law, effective for distributions after December 31, 2015, the definition of "public safety employee" also includes any federal law enforcement officer, any federal customs and border protection officer, any federal firefighter, or any air traffic controller described in section 8331 or section 8401 of title 5 of the U.S. Code.

The new law also eliminates the need for the plan to be a defined benefit plan. Under the new law, a distribution from both a defined benefit plan and a defined contribution plan can qualify for the public safety employee exception to the 10% penalty.

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