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Tax Penalty and BackDROP

Feb 15, 2022, 13:45 PM by MOSERS
This year(2022) I will be 54 and will have completed 32 years working for the State. I will have my 5 year backdrop complete in 2024 at age 56. I plan to roll over my back drop sum. Will I be penalized for collecting my monthly retirement checks before 59-1/2? 

Once you meet both the age and service requirements for normal retirement, there is no tax penalty for collecting your monthly defined benefit pension payment from MOSERS prior to age 59 ½.

Given a retirement of age 55 or later and a rollover of a BackDROP payment to a qualified retirement account *(such as MO Deferred Comp), future withdrawals from that account prior to age 59 ½ would not be subject to a 10% early withdrawal penalty.

For further reference, please see the Special Tax Notice brochure for more details.

*Excludes Individual Retirement Accounts (IRA’s).

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