Expert: Arthur Naman - 4/23/2009

Question
My husband is 53 and wants to retire. He has a pension provided thru his union that he contributed to for over 30 years. We want to take our pension payments in monthly payments over the rest of his life. Does he have to pay the additional 10% early tax penalty? I am confused by the IRS publication 575 because it says that there is an exception to the tax on early distributions if they are paid as part of a series of equal payments over the rest of your life. Thank you for your help.

Answer
If you simply choose to take out a withdrawal, then yes, there is a penalty tax on early withdrawal from an IRA/Pension.

Yes, there are provisions for an exception to the rule if the funds in the retirement account are annuitized -- take the funds and purchase an annuity for his life or for his life and the life of his beneficiary. Please review IRS Pub. 590, Individual Retirement Accounts, pg. 54.