Question: I retired from Lockheed Martin this year, I am older than 55 but younger than 59 1/2. Can I make withdrawals from my 401(k) that are not equal periodic payments without paying a 10 percent penalty? — J. V., Orlando z Answer: You can avoid the 10 percent early distribution penalty so long as you left your job during or after the calendar year you turned 55. In addition, it is important to note this exception applies to qualified plans such as your 401(k), but does not apply to IRAs rolled over after you retired. You should consult your tax adviser for further clarification and assistance with reporting distributions properly. — Chris Toadvine z Q: When we sold our house five and a half years ago, we held the mortgage. Recently the buyer wanted to refinance so we got a payoff for what was owed to us. Will we have to pay taxes on the payoff? — B.T.
A: You will have to pay taxes only on any deferred taxable gain remaining from when you sold the house. Married couples do not have to pay taxes on gains up to $500,000 when they sell the home that they lived in for at least two of the five years prior to the sale. If you did not have a taxable gain, then receiving payment on a mortgage note receivable is not a taxable transaction. You will only have to pay taxes on the interest income you received during the year. — Paula M. Taylor
Q: I will turn 62 in August. I am considering starting to collect my Social Security early. Everyone I know keeps telling me I should collect half of my ex-spouse's benefits at age 62 — we were married 16 years and I have not remarried — and then wait until I reach my full eligibility to collect my benefits. Is this an option I have? — N. F., Eustis
A: You may apply for the ex-spouse's benefits at age 62 since you were married for more than 10 years and if you have not remarried. Your ex-spouse also must be eligible for benefits, he or she must be at least 62 and you have to have been divorced for more than two years. The amount will be reduced, however, since you are not at retirement age. At retirement age you can switch to your own benefit amount if it is higher. If you begin your own benefits at 62, they will be reduced indefinitely. You need do the math to determine which would be of higher value to you. — Dianne Webb
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