by Carolyn Rothwell on October 4, 2012

Tax Penalties on Pre-59.5 Retirement Plan Withdrawals


If your client is taking withdrawals from qualified retirement plans prior to age 59 ½, you have an option to exclude the early distribution penalty of 10%.

By default, the early distribution penalty will be included in the calculations.

If your client is not subject to early distribution penalties due to an exception, you will want to turn off the early distribution penalty option to prevent the 10% excise tax. 

In Silver Financial Planner, you will find the check box to exclude early withdrawal penalty tax on the Rates input section.  The check box is labeled “Exempt withdrawals prior to age 60 from penalties on early distributions from qualified plans” – check this box only if the client is exempt from early distribution taxes:

SilverPre59PenaltyFor Easy Money and Golden Years users, in TOTAL Planning Suite, you will find the check box to exclude early withdrawal penalty tax in the Assumptions section, on the Retirement Assumptions tab. The check box is labeled “Calculate Penalty Tax on Pre-59.5 plan distributions” - uncheck this box only if the client is exempt from early distribution taxes:

TOTOALPre59Penalty

Subscribe to Email Updates

Recent Posts

Planner Guides

Check out our free informational guides for advisors including:
  • Fundamental Financial Planning Interview Guide 
  • Making the Most out of Planning Engagements
  • Social Security: Choices Opportunities, and Decisions
  • Understanding Medicare Fundamentals

Popular Posts

Carolyn Rothwell

Carolyn enjoys spending her time building Money Tree Software's brand and products. Her experience creating and delivering financial plans for a full-service financial planning firm and supporting advisors working to provide the best planning to their clients as a Money Tree support member has provided an excellent understanding of the importance of financial planning.