Premature Distributions Clause Samples
The Premature Distributions clause defines the rules and conditions under which distributions from a fund, trust, or similar entity may be made before the originally scheduled time or event. Typically, this clause outlines the circumstances that justify early payouts, such as financial hardship, dissolution, or specific triggering events, and may set limits or procedures for such distributions. Its core function is to provide flexibility for beneficiaries or participants while ensuring that early withdrawals are managed in a controlled and equitable manner, thereby addressing the need for liquidity or unforeseen circumstances without undermining the entity’s overall purpose.
Premature Distributions. In addition to any regular income tax that may be payable, distributions from your IRA ▇▇▇t occur before you reach age 59 1/2 (except in the event of disability, death, rollover, medical expenses in excess of 7.5% of adjusted gross income, medical insurance premiums in the event of unemployment or as a qualifying distribution of an excess contribution), will be assessed a 10% additional income tax on the amount distributed which is includible in your gross income. However, the additional 10% income tax will not be imposed if the distribution is one of a scheduled series of level payments to be made over your life or life expectancy or over the joint lives or joint life expectancies of you and your beneficiary. Amounts treated as distributions from the IRA ▇▇▇ause of pledging the IRA ▇▇ described below, or prohibited transactions as described below, will also be considered premature distributions if they occur before you reach age 59 1/2 (assuming you are not disabled).
Premature Distributions. If you are under the age of 59½ and receive a nonqualified ▇▇▇▇ ▇▇▇ distribution, or if you receive a distribution of conversion amounts within the five-year period beginning with the year in which the conversion occurred, an additional tax of 10% will generally apply to the amount includible in income in the year of the distribution or conversion, unless the distribution is made on account of death, disability, a qualifying rollover, a transfer, the timely withdrawal of an excess contribution, or the distribution is part of a series of substantially equal periodic payments (at least annual payments) made over your life expectancy or the joint life expectancy of you and your beneficiary. Payments for medical expenses that exceed 7.5% of your AGI and distributions to pay for health insurance by an individual who has separated from employment and who has received unemployment compensation under a federal or state program for at least 12 weeks are also exempt from the 10% tax. Payments to cover certain qualified education expenses and distributions for first-home purchases (up to a lifetime maximum of $10,000) are exempt from the 10% tax. Distributions to satisfy a levy issued by the IRS, as well as distributions while in active military duty [see “Qualified Reservists Distribution” in Section 7(f) below] will also be exempt from the 10% tax.
Premature Distributions. If you are under age 59 1/2 and receive a distribution from your IRA account, a 10% additional income tax will apply to the taxable portion of the distribution unless the distribution is received due to death; disability; a series of substantially equal periodic payments at least annually over your life expectancy or the joint life expectancy of you and your designated beneficiary; medical expenses in excess of 7.5% (applies for 2017 and 2018) of your adjusted gross income; health insurance premiums paid by certain unemployed individuals; qualified acquisition costs of a first time homebuyer; qualified higher education expenses; a qualifying rollover distribution; the timely withdrawal of the principal amount of an excess or nondeductible contribution; due to an IRS levy; Qualified Hurricane Distributions; Qualified Wildfire Distributions and 2016 Disaster Distributions, or qualified reservist distributions. If you request a distribution in the form of a series of substantially equal payments and you modify the payments before 5 years have elapsed and before attaining age 59 1/2, the 10% additional income tax will apply retroactively to the year payments began through the year of such modification.
Premature Distributions. You can elect to receive distribution from your Account at any time. However, if you receive a distribution from your IRA before you attain the age of 59½, the distribution will be considered premature and subject to a 10% penalty tax on the taxable portion of the distributed amount unless one of the following exceptions applies:
Premature Distributions. If you are under age 59 ½ and receive a “non- qualified” distribution from your ▇▇▇▇ ▇▇▇, a 10% additional income tax will apply to the taxable portion (generally the earnings portion) of the distribu- tion unless the distribution is received due to death; disability; a qualifying rollover distribution; the timely withdrawal of the principal amount of an excess; substantially equal periodic payments; certain medical expenses; health insurance premiums paid by certain unemployed individuals; qualified higher education expenses; qualified first time homebuyer expenses; due
Premature Distributions. Although you may elect to take distributions from your account at any time, if you are under age 59½ and receive a nonqualified ▇▇▇▇ ▇▇▇ distribution, an additional tax of 10 % will generally apply to the amount includible in income in the year of the distribution. If you are under age 59½ and receive a distribution of conversion amounts within the five‐year period beginning with the year in which the conversion occurred, an additional tax of 10% will generally apply to the amount of the distribution. The additional tax of 10% will generally not apply if a distribution is made on account of 1) you are totally and permanently disabled, 2) the timely withdrawal of an excess contribution, 3) a series of substantially equal periodic payments (at least annual payments) made over your life expectancy or the joint life expectancy of you and your beneficiary, 4) medical expenses which exceed 7.5% of your adjusted gross income, 5) paying medical insurance premiums during a period of unemployment, 6) certain qualified education expenses, 7) you use the distribution to buy, build, or rebuild a first home, 8) a levy issued by the IRS, 9) the distribution is a qualified reservist distribution, or 10) you are the beneficiary of a deceased IRA owner.
Premature Distributions. If you receive a payment from your ▇▇▇ before you attain the age of 59 1/2, the payment will be considered a premature distribution, unless it falls under one of the following exceptions:
(1) distributions made due to your death;
(2) distributions made due to your disability;
(3) any distribution to an alternate payee under a qualified domestic relations order;
(4) a series of substantially equal periodic payments at least annually over a period not to exceed single or joint life expectancy;
(5) distributions made to pay for medical expenses that exceed 7.5% of your adjusted gross income; or
(6) distributions made to pay health insurance premiums by certain unemployed individuals;
(7) distributions made to pay for certain qualified higher education expenses;
(8) distributions made to pay for qualified first-time home purchases, not to exceed $10,000;
(9) a qualifying rollover distribution; or
(10) the timely withdrawal of the principal amount of an excess or nondeductible contribution. If you receive a premature distribution, the amount received is included in your gross income in the taxable year of receipt. In addition, your income tax liability for that tax year is increased by an amount equal to 10% of the premature distribution includible in your gross income. If your account is disqualified because you engaged in a prohibited transaction discussed above, the amount deemed distributed to you is included in your gross income. The premature distribution penalty tax (10% of the amount of the deemed distribution) will also apply if you had not attained the age of 59 1/2 before the beginning of such tax year. If you request a distribution in the form of a series of substantially equal payments, and you modify the payments before 5 years have elapsed and before attaining age 59 1/2, the 10% additional income tax will apply retroactively to the year payments began through the year of such modification.
Premature Distributions. Before any distribution is made from the Custodial Account, except in the case of the Participant's death or disability (as defined in section 72(m) (7) of the Internal Revenue Code) or attainment of age 59 1/2, the Participant must furnish the Custodian with a declaration of his intentions as to the disposition of the amount to be distributed; however, the Custodian assumes no responsibility for the tax treatment of any distribution from the Custodial Account; such responsibility is solely that of the Participant ordering the distribution.
Premature Distributions. If you receive distributions from your IRA before you reach age 59 1/2, and you are not disabled, you will be subject to a 10% penalty tax in addition to the ordinary income taxes you must pay on the distribution. The 10% penalty tax will also apply to any portion or all of your account which is treated as having been distributed to you because you engaged in a prohibited transaction or pledged your account as security for a loan. Proper rollovers into another IRA and proper withdrawal of excess contributions are not considered premature distributions. The penalty will also not apply if distribution begins before age 59 1/2 and is made in a series of substantially equal payments (not less frequently than annually) over your life expectancy or your and your designated beneficiary's joint life expectancy, and you do not attempt to alter the payment arrangement before the later of five years after payments begin or when you reach age 59 1/2, unless you die or become disabled before this time.
Premature Distributions. Distributions from your SIMPLE-▇▇▇ made before you reach age 591/2 will be subject to a 10% non-deductible penalty tax (in addition to being taxable as ordinary income) unless the distribution is an exempt with- drawal of an excess contribution, or the distribution is rolled over to another SIMPLE-▇▇▇ (or, after the “two year period,” a Traditional ▇▇▇) that is eligible to receive such rollover, or the distribution is made on account of your death or dis- ability. Exceptions to the 10% early withdrawal penalty may also be available to SIMPLE ▇▇▇ owners if certain requirements are satisfied including: • part of a series of substantially equal periodic payments made not less fre- quently than annually over your life or life expectancy, or the joint life expectan- cies of you and your Beneficiary, • for qualified medical purposes in excess of 7.5% of your AGI, • to cover qualified health insurance premiums of certain unemployed individuals, • used to acquire a first-time principal residence (subject to a $10,000 lifetime limit from all your IRAs), for you, as Depositor, your spouse, your or your spouse’s children, grandchildren, or ancestors, • used to pay qualified higher education expenses for you, your spouse, your children, or your grandchildren, or the children or grandchildren of your spouse, or • is made on account of an IRS levy, as described in Code Section 6331. To the extent a premature penalty applies to any distribution taken from your SIMPLE-▇▇▇, this non-deductible penalty tax will be increased to 25% if the distri- bution occurs within “the two-year period” described above. The Custodian is permitted to rely on its own records in determining whether a dis- tribution from your SIMPLE-▇▇▇ is subject to the 25% penalty applicable to a distri- bution. If you established your SIMPLE-▇▇▇ with a rollover or transfer from another SIMPLE-▇▇▇, the Custodian may, but is not required to, confirm the date contribu- tions were first deposited to your SIMPLE-▇▇▇ under the SIMPLE Plan maintained by your Employer from a previous account statement or other information the Custodian may deem necessary to confirm the date contributions were first made to your SIMPLE-▇▇▇ under the SIMPLE Plan maintained by your Employer. You should consult with your tax advisor to see if an exception to this penalty applies before requesting any distribution prior to age 591/2.