Generally, the amounts an individual withdraws from an IRA or retirement plan before reaching age 59½ are called "early" or "premature" distributions. Individuals must pay an additional 10% early withdrawal tax unless an exception applies.
* Retirement plans: The 10% additional tax generally applies to early distributions from qualified plans, 403(a) or (b) annuity plans and traditional IRAs, including IRAs that are connected to a SIMPLE IRA or SEP plan maintained by an employer. Qualified plans include traditional pension plans, cash balance plans, 401(k) plans and profit-sharing plans, among others. Distributions from a governmental 457(b) plan are not subject to the 10% additional tax except for distributions attributable to rollovers from another type of plan or IRA.
SIMPLE IRA: Distributions made from a SIMPLE IRA plan within the first 2 years of participation incur a 25% additional tax instead of 10%.
** Qualified public safety employees: The separation from service exception for public safety employees who are age 50 or over also includes specified federal law enforcement officers, corrections officers, customs and border protection officers, federal firefighters, private-sector firefighters, and air traffic controllers. An exemption is allowed for distributions from defined benefit plans, defined contribution plans or other types of governmental plans, such as the TSP. See IRC Section 72(t)(10). This exemption also applies to private-sector firefighters.