I did receiv a lump sum of money from a QDRO. They deducted 20% Fed & State tax. I am going to file my income 2009 income tax. Do I have to pay 10% penalty on this also?
According to IRS Site if judge order QDRO then I don’t have to pay 10% early withdraw penalty. Is this true?
“Retirement Topics – Tax on Early Distributions
Generally, the amounts an individual withdraws from his or her IRA or other qualified retirement plan before reaching age 59½ are called ”early” or ”premature” distributions. Individuals must pay an additional 10% early withdrawal tax and report the amount to the IRS for any early distributions, unless an exception applies.
Exceptions: There are several exceptions to the age 59½ rule. Even if individuals receive a distribution before they are age 59½, they may not have to pay the 10% additional tax if they are in one of the following situations.
* They have unreimbursed medical expenses that are more than 7.5% of their adjusted gross income.
* They are disabled.
*The distributions are not more than their qualified higher education expenses (IRA only).
* The distribution is made to an alternate payee under a QDRO
If you roll it over you pay nothing otherwise it is like any other early withdrawal.