Common use of Premature Distributions Clause in Contracts

Premature Distributions. If you are under the age of 59½ and receive a nonqualified Xxxx XXX 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 the age of 59½ and receive a nonqualified Xxxx XXX 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 beneficiaryBeneficiary. 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.