TP reitred from service as a corrections officer 2months after he qualified for retirement age 50, he Received a 1099-R for his monthly payments coded 2. He then decided to take a large distribution to pay off his house. This 100K is coded 1. Does he pay the 10% penalty since this is not a distribution of scheduled equal payments. Or since he qualifies as a PSO can he take exemption code 1 since he was 50 and a PSO. Have waivered on this but thinking he sould not have to be 10K penalty on the large distribution.
Thanks for the advise in advance, Come on Monday.