In this session, Larry Pon, CPA teaches how to take advantage of the various exceptions to the early distribution penalty from IRAs and retirement accounts. These exceptions may be triggered by any one of several scenarios, including: a spouse's death, total and permanent disability of the participant/IRA owner, extraordinary large medical expenses and more.
Larry also reviewed how to request a waiver for missed or incorrect required minimum distributions (RMDs), preparing the Form 5239 for multiple years for excess contributions to qualified plans, and requesting abatement of penalties for early distributions from IRAs and retirement plans. The penalty for a missed or incorrect RMD is among the highest in the tax code at 50%. Excess contributions are subject to a six percent excise tax that continues annually until the overfunded amount is withdrawn. Note that some of these exceptions only apply to IRAs and not employer retirement plans.