{"id":20382,"date":"2017-06-14T12:00:00","date_gmt":"2017-06-14T12:00:00","guid":{"rendered":"https:\/\/www.hrblock.com\/tax-center\/"},"modified":"2021-08-10T15:40:05","modified_gmt":"2021-08-10T20:40:05","slug":"lump-sum-distribution-penalties","status":"publish","type":"post","link":"https:\/\/www.hrblock.com\/tax-center\/irs\/tax-responsibilities\/lump-sum-distribution-penalties\/","title":{"rendered":"If I received a lump sum distribution from my former employer, how can I avoid the 10% penalty on re"},"content":{"rendered":"<p>If you take a taxable distribution before age 59 1\/2, the distribution is subject to a 10% early withdrawal penalty. However, if you roll over your lump-sum distribution into another retirement plan within 60 days, you won&#8217;t be penalized.<\/p>\n<p>You can also avoid the early withdrawal penalty if you meet one of the exceptions on Form 5329. Some common early withdrawal exceptions include:<\/p>\n<ul>\n<li>Qualified retirement plan distributions due to separation from service in or after the year you reach age 55 (age 50 for qualified public safety employees such as policemen and firemen.)<\/li>\n<li>Distributions made as part of a series of substantially equal periodic payments, at least annually, and for your life or for the joint lives of you and your designated beneficiary<\/li>\n<li>Distributions due to total and permanent disability<\/li>\n<li>Distributions due to death unless the distribution is from a modified endowment contract<\/li>\n<li>Qualified retirement plan distributions for deductible unreimbursed medical expenses you paid this year. This applies up to the amount your expenses are more than 10% (or 7.5% if you or your spouse is 65 or older) of your adjusted gross income (AGI).<\/li>\n<\/ul>\n","protected":false},"excerpt":{"rendered":"<p>If you take a taxable distribution before age 59 1\/2, the distribution is subject to a 10% early withdrawal penalty. However, if you roll over your lump-sum distribution into another retirement plan within 60 days, you won&#8217;t be penalized. You can also avoid the early withdrawal penalty if you meet one of the exceptions on [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[25,53],"tags":[],"class_list":["post-20382","post","type-post","status-publish","format-standard","hentry","category-irs","category-tax-responsibilities"],"acf":[],"yoast_head":"<title>Lump Sum Distribution Penalties | H&amp;R Block<\/title>\n<meta name=\"description\" content=\"Is there any way to avoid penalties for a lump sum distribution from your retirement account? 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