Exclusion of the premature distribution penalty due to state levy - Spidell

Exclusion of the premature distribution penalty due to state levy

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Message Board Exclusion of the premature distribution penalty due to state levy

This topic contains 1 reply, has 0 voices, and was last updated by Doug Thorburn 11 months, 2 weeks ago.

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  • #33750
    Doug Thorburn
    Participant

    We can exclude a premature retirement plan distribution from the federal 10% and state 2.5% premature withdrawal penalties due to an IRS levy. Can we exclude such a distribution from the penalty due to an FTB levy and, if so, can we exclude from both federal and state?

  • #120481
    Mark Bole
    Participant

    I'd say "no".  See IRC §72(t)(2)(A)(vii).  It only refers to levies made under §6331, which I'm pretty sure does not include state agencies.

    • #35440
      Doug Thorburn
      Participant

      "Pretty sure"? If our clients only knew how little we know….But I also wonder, does the state have some sort of special exclusion–or do they simply follow federal rules on this?