Citi Benefits Handbook
Penalty Tax for Early Distribution
In addition to ordinary income taxes, you may owe a 10% penalty tax on the taxable portion or Roth portion of any distribution you receive before you reach age 59-1/2. Withdrawals from the Plan you may make during employment as well as distributions after termination of employment are subject to ordinary income tax plus the 10% additional tax. The 10% penalty tax will not apply in the following situations:
  • Your account is paid to you if you terminate employment with Citi in the calendar year in which you will attain age 55 or any later age;
  • Your account is paid to you because you have become disabled as defined in the Code;
  • Your account is paid to your beneficiary in the event of your death;
  • The amount distributed consists of dividends on the Citigroup Common Stock Fund;
  • The distribution is made to you in a year when your unreimbursed medical expenses, as defined by the IRS, exceed 10% of your adjusted gross income (this percentage increased from 7.5% as of January 1, 2017);
  • Payment is directed to another person by a Qualified Domestic Relations Order (QDRO) or payment is made to you as an alternate payee as a result of a QDRO;
  • You roll over the distribution within 60 days, or direct the Plan to transfer that amount, to a rollover IRA or to another eligible retirement plan;
  • Payment is made in installments over your life expectancy or the joint life expectancies of you and your beneficiary (provided that the installments begin after you separate from service);
  • Payment is made in an annuity over your life or the joint lives or you and your beneficiary;
  • You are ordered or called to duty in the military reserves as a qualified reservist and you receive a distribution during your active duty period; or
  • You receive a qualified distribution from your Roth accounts. A qualified distribution is one that (1) is made on or after the date that you attain age 59-1/2, (2) is made to your beneficiary or your estate after your death, (3) or is attributable to your having a disability as defined in the Code.