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 your Employer 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.
- The distribution is a qualified birth or adoption distribution.
- Payment is directed to another person by a 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 directly to another eligible retirement plan or IRA.
- 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.
- You receive a "qualified distribution" from your Roth accounts. A distribution is a qualified distribution if your Roth Contribution Account has been in existence for at least five years and the distribution is (1) made on or after the date that you attain age 59-1/2, (2) made to your beneficiary or your estate after your death, or (3) attributable to your having a disability as defined under IRS Rules.