(402) 397-5033 Jeff@omahaadvisors.com

Age 50

Catch-up contributions for most retirement plans and IRAs can be made beginning in the year you are going to turn age 50. The only plan that does not allow catch-up contributions is the SEP IRA. The following are the catch-up limit amounts.

IRA/Roth IRA  $1,000

SIMPLE IRA     $3,000

Employer plans (401(k), 403(b), governmental 457(b), etc.)            $6,000

There is an exception to the 10% early distribution penalty for certain public safety workers who separate from service in the year they turn age 50. As of January 1, 2016, the age 50 exception will apply to both defined contribution and defined benefit plans for public safety employees. It does not apply to IRAs. This group now includes state and local police, firefighters, emergency medical service workers, federal public safety workers, including law enforcement officers, certain customs officials, border protection officers, air traffic controllers, nuclear materials couriers, U.S. Capitol Police, Supreme Court Police, and diplomatic security special agents of the Department of State.

Age 55

There is an exception to the 10% early distribution penalty for all employees who separate from service in the year they turn age 55 or later. The exception applies only to employer plan funds. If those funds are moved to an IRA, the exception is lost. It also does not apply when a plan participant separates from service at an earlier age and waits until age 55 to take a distribution from the plan.

Age 59 ½

No more early distribution penalties for anyone, for any reason. This one is based on the actual date you turn age 59 ½.

Age 59 ½ to Age 70 ½

No rules, no penalties. You can take distributions any time you want in any amount you want. This is the sweet spot for financial and tax planning.

Social Security Eligibility Ages

You should know when you qualify for early Social Security and full Social Security benefits. Once you reach age 70, there is no further benefit to delay claiming your Social Security benefits.

Age 70 ½

No more IRA contributions (does not include Roth IRAs) can be made beginning with the year you turn age 70 ½.

Required minimum distributions (RMDs) must begin for the year you turn age 70 ½. The first year’s distribution can be delayed until April 1st of the following year which is your required beginning date (RBD), but you will also have to take the second year’s distribution in the same year. If you are still working you may be able to delay RMDs from your company plan until the year you retire. This rule does not apply to IRAs.

Age 75

403(b) plan balances accumulated prior to 1987 do not have to start RMDs until age 75.

Age 85

Qualifying longevity annuity contracts (QLACs) do not have to be included in your RMD balance until age 85.

1936

You, or the plan participant if you are a beneficiary, must have been born before 1936 in order to qualify for 10-year averaging on a lump-sum distribution from the employer plan.