Definition of 59 1/2


R

Rick

What is the IRS definition of age 59 1/2? I'm specifically asking about the
age where I can access IRA funds/earnings without paying a penalty. Is it
literally the day of my birthday plus six months, or is it January 1 of the
year in which I turn 59 1/2, or is there some other definition?
 
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H

Harlan Lunsford

Rick said:
What is the IRS definition of age 59 1/2? I'm specifically asking about
the age where I can access IRA funds/earnings without paying a penalty.
Is it literally the day of my birthday plus six months, or is it January
1 of the year in which I turn 59 1/2, or is there some other definition?
Unlike the definition of age 70 1/2, by which a person has to perform an
act in the year in which one reaches that age, it's not the case here.
It's quite literally 59 1/2, i.e. age 59 plus six months.

ChEAr$,
Harlan Lunsford, EA n LA
 
J

jhhtexas

What is the IRS definition of age 59 1/2?  I'm specifically asking about the
age where I can access IRA funds/earnings without paying a penalty.  Is it
literally the day of my birthday plus six months, or is it January 1 of the
year in which I turn 59 1/2, or is there some other definition?
It is your actual 59th birthday + 6 months
 
S

Seth

It is your actual 59th birthday + 6 months
If someone turns 59 on August 30, is withdrawal without penalty
permitted the following February last?

Seth
 
H

Harlan Lunsford

Seth said:
If someone turns 59 on August 30, is withdrawal without penalty
permitted the following February last?
Righto.

C$,
H
 
H

Harlan Lunsford

Seth said:
If someone turns 59 on August 30, is withdrawal without penalty
permitted the following February last?
Scratch my just posted reply. Feb "last" would still be within the six
months, therefore, better wait till next day.

C$,
H
 
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P

Paul Thomas, CPA

Harlan Lunsford said:
Scratch my just posted reply. Feb "last" would still be within the six
months, therefore, better wait till next day.


I'd say March 1st.

There's little value to cutting things that close.
 
A

Alan

Rick said:
What is the IRS definition of age 59 1/2? I'm specifically asking about
the age where I can access IRA funds/earnings without paying a penalty.
Is it literally the day of my birthday plus six months, or is it January
1 of the year in which I turn 59 1/2, or is there some other definition?
The age related issue popped up in MTM back in 2003. There were
two threads that highlighted the fact that there was guidance
relating to when a child attained a certain age for applicable
tax benefits (CTC, C&DCC, EITC, etc.), when an individual
attained age 70 1/2 for purposes of RMD, when an individual
attained age 65 for purposes of the standard deduction and when
lump sum distributions from a qualified plan could be averaged
over 10 years. There is no official guidance on age 59 1/2.
Therefore, using the definition that the IRS used for when one
attains age 70 1/2, the answer is (others have said this) the
anniversary of your 70th birthday plus six months. See below for
the Q&A from the Sec. 401 regs.

The question has been asked about someone born on August 30th.
One could also ask about those born on August 29th, and 31st. Is
the answer the same for all: I.e., Feb. 28th of the following
year or Feb. 29th if the following year is a leap year? As there
is no uniform definition of a month except in certain financial
transactions, one must take the wording on its face value. A
month is the defined number of days for that specific month.
Therefore, one would probably be safe in using Feb. 28th for a
non-leap year and Feb. 29th for a leap year as the date one
turned age 59 1/2 if born on 8/29, 8/30 or 8/31.

Now... "you've got to ask yourself one question--Do I feel
lucky?" (I always wanted to use that line in a tax situation!)

Q–3. When does an employee attain age 70 1/2?

A–3. An employee attains age 70 1/2 as of the date six calendar
months after the 70th anniversary of the employee's birth. For
example, if an employee's date of birth was June 30, 1933, the
70th anniversary of such employee's birth is June 30, 2003. Such
employee attains age 70 1/2 on December 30, 2003. Consequently,
if the employee is a 5-percent owner or retired, such employee's
required beginning date is April 1, 2004. However, if the
employee's date of birth was July 1, 1933, the 70th anniversary
of such employee's birth would be July 1, 2003. Such employee
would then attain age 70 1/2 on January 1, 2004 and such
employee's required beginning date would be April 1, 2005.
 
H

Harlan Lunsford

Alan said:
The age related issue popped up in MTM back in 2003. There were two
threads that highlighted the fact that there was guidance relating to
when a child attained a certain age for applicable tax benefits (CTC,
C&DCC, EITC, etc.), when an individual attained age 70 1/2 for purposes
of RMD, when an individual attained age 65 for purposes of the standard
deduction and when lump sum distributions from a qualified plan could be
averaged over 10 years. There is no official guidance on age 59 1/2.
(balance snipped.....)

No official guidance? Funny, I read in publication 590 that a
qualified distribution can be one made ON or after the date one attains
age 59 1/2. Pretty clear, I think.

ChEAr$,
Harlan Lunsford, EA n LA
 
R

Rick

Harlan Lunsford said:
(balance snipped.....)

No official guidance? Funny, I read in publication 590 that a qualified
distribution can be one made ON or after the date one attains
age 59 1/2. Pretty clear, I think.
Depends on how you define that 1/2. Is it six months or is it 182 1/2 days?
If your birthday is August 31st, then 182 1/2 days later would really take
you to March 2nd.

Given the ambiguity of the requirement, I wonder if the IRS would really
make a big deal about this if you were off by a day or two.
 
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H

Harlan Lunsford

Rick said:
Depends on how you define that 1/2. Is it six months or is it 182 1/2
days? If your birthday is August 31st, then 182 1/2 days later would
really take you to March 2nd.

Given the ambiguity of the requirement, I wonder if the IRS would really
make a big deal about this if you were off by a day or two.
Yes, they would make a big deal of it; a 10% deal! (grin

But of course should a client ask me before hand (Note; they don't
always), I would advise them to be sure and wait 183 days.
(hours don't count.)

ChEAr$,
Harlan Lunsford, EA n LA
 
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