Exception to Early pension distribution - Spidell

Exception to Early pension distribution

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Message Board Exception to Early pension distribution

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    • #183747
      Timothy Folkers
      Participant

      Client has taken distributions from his solo 401(k) plan in 2018.  He was a real estate consultant and lost his only client in early 2018.  the last income was in the 1st quarter of 2018.

      Question – under the separation from service exception for the penalty.   Would closing your own self-employed business down be considered an “separation” for the exception?   I’ve looked at the wording of the exception and it does reference “employee” and I don’t find anything on point regarding self-employed.

      Would self-employed taxpayers qualify?   What steps might be advised to support the separation from service.   (there was NO LLC involved).

    • #183779
      Lynn Freer
      Participant

      The exception does not apply to self employed or if owns 10% or more of the business.

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