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Qualified Military Reservist Distribution Early Withdrawal Exemption

In certain cases, when military reservists are called to active duty, they are allowed to receive early withdrawal distributions from retirement accounts and select other accounts. However, there are eligibility requirements that must be met. 

Qualified reservists are permitted penalty-free withdrawal from IRAs, 401(k)s, and other arrangements if ordered or called to active duty. (Code Sec. 72(t)(2)(G)(iv)).

A “qualified reservist distribution” is any distribution to an individual if:

  • the distribution is from an individual retirement plan, or from amounts attributable to employer contributions made as elective deferrals described in Code Sec. 402(g)(3)(A), Code Sec. 402(g)(3)(C), or Code Sec. 501(c)(18)(D)(iii);
  • the individual was, by reason of being a member of a “reserve component” (as defined in 37 USC 101), ordered or called to active duty for: (i) a period in excess of 179 days, or (ii) an indefinite period;,
  • the distribution is made during the period: (i) beginning on the date of the order or call to active duty, and (ii) ending at the close of the active duty period.
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