Q. I retired as a federal law enforcement officer with 26 years of service at age 48 in 2015. Then the law was passed to allow those who retire the year they turn 50 or after to make penalty-free withdrawals. I’ve read about the IRS rule of 72(t) option and to me it seems as if — as long as I wait until I turn age 50 and invoke the rule of 72(t) — I should be able to make additional withdrawals without incurring the penalty. Is there an exception for those FLEOs who are allowed to retire with 25 years of service at any age?
A. There is no exception to the early withdrawal penalty based on years of service. You may start 72(t) payments at any time, however, and avoid the early withdrawal penalty if you do it right.