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Is the Schwarz Partners LP 401-k plan a qualified plan?

I left Schwarz in 2014 and cashed out my 401k. It was the same year I turned 55 so there was no 10% penalty applied, but I need to be sure the 401-k was qualified. Thank you.

May 15, 2016 in  |  Flag
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Yes, and while the distribution would have been reported as taxable income for 2014 on an IRS Form 1099-R, it should not have been subject to the additional penalty tax on early distributions taken prior to age 59 1/2 [IRC §72(t)], as long as (1) you attained age 55 in 2014, and (2) the distribution was made to you after the date of your separation from service [IRC §72(t)(2)(A)(v)].

The plan administrator should have entered the code"2" in Box 7 of your 1099-R, reporting to the IRS that a known exception to the penalty tax applied. If they didn't, your tax preparer should have filed IRS Form 5329 your 2014 return. On that form, the total distribution should have been entered in Lines 1 and 2, and the exception number "01" should have been entered to the left of Line 2. The total distribution figure entered should match what was reported in Box 2a of your 1099-R, or Box 1 if 2a is blank and the first box in Box 2b was checked. On Form 5329, you subtract Line 2 from Line 1 to calculate the amount subject to the additional 10% tax (which would be 0), and enter that amount on Line 3.

2014 IRS Form 5329: https://www.irs.gov/pub/irs-prior/f5329--2014.pdf

By definition, a "401(k) Plan" is a Qualified Retirement Plan as defined in Section 401(a) of the Internal Revenue Code. 401(k) is actually just a feature that a Profit-Sharing Plan may include, permitting plan participants to make elective deferral contributions via salary reduction. So the Schwarz Partners plan is a Profit-Sharing Plan, which is a specific type of Defined Contribution Qualified Retirement Plan.

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