Q. I am a firefighter with a county fire department in Florida. As such, I am part of the Florida Retirement System in the special risk class. I started my career early and will be eligible for retirement with full benefits and no FRS penalties by age 48. (This is 25 years of service.) However, because of the Internal Revenue Service penalty for retiring before age 50, I would receive a 10 percent tax penalty in addition to the normal taxes I will pay on my retirement income. I understand that I will receive the penalty of 10 percent. However, I want to know whether that penalty goes away after I have reached age 50, or if it continues until I am 59?
A. The early withdrawal penalty rules will continue to apply until you reach age 59½. You can avoid the penalty by withdrawing from your Thrift Savings Plan account in a series of Substantially Equal Periodic Payments under section 72(t) of the tax code.
1 Comment
WRONG ANSWER. 1) THERE’S NO 10% PENALTY ON YOUR FRS PENSION FROM THE FRS AT AGE 48. 2) IF THE PROCEEDS/ DISTRIBUTIONS ARE FROM D.R.O.P., under the pension protection act of 2006, as a fire fighter age 50, there is no 10%penalty.3)IF the distributions are from a 457 deferred comp. plan, again no 10% early withdrawal Nor do you need to adhere to the sepp 72t nonsense. 4) Don’t forget to claim your $3000 exclusion of taxable income for payments to qualified health insurance premiums. (Also part of the ppa 2006)