What are my options if I receive distributions before retiring?

In general, the retirement plan rules were constructed to discourage distributions before retirement. The following are the options one has when receiving a distribution prior to retirement:

Pay ordinary income tax.
Roll over your distribution: If you have not yet reached age 59 and 1/2 and you receive a distribution from a qualified plan, you can roll over the distribution into a traditional IRA or another retirement plan to continue deferring tax. Also, you can convert to a Roth IRA, but you must pay income tax on the converted amounts.
Ten-year averaging: You are eligible to use ten-year averaging if you satisfy all of the following options:
- you were born before 1936
- you have not used ten-year averaging on any distribution since 1986
- you participated in the plan for at least five years.

Please contact one of our IRA Experts at 800-472-0646 for more information.