New Statute Reduces Age Threshold For Certain Early Distributions For Public Safety Employees

The Defending Public Safety Employees’ Retirement Act was recently enacted into law.  The new statute will get rid of the IRS penalty for early distributions from a qualified retirement plan for certain public safety employees.  Currently a person who makes early distributions from a retirement fund before reaching the age of 59 ½ can be at risk of incurring Internal Revenue Code Section 72(t)’s 10 percent income tax on early distributions.  Starting on January 1, 2016 the new lower threshold will apply to defined contribution and benefit plans.  Certain Federal law enforcement and public safety employees will also be able to benefit from the lower age threshold.  Federal and State public employees will also be able to take substantially equal periodic payments without incurring the 10 percent tax. 

See Michael J. Jones, New Law Lowers Age Threshold for Certain Early Distributions, Wealth Management, July 13, 2015.