Premature Distribution

Many of the male writers at Shmoop had problems with this in high school. But as they grew older, the opposite problem presented itself. So we shan't go there.

In the financial world, a premature distribution relates to retirement accounts. Any time you take money out of a 401(k) ahead of the set time, it counts as a premature distribution...meaning you are subject to penalties and tax implications.

Under the rules of a 401(k), premature distributions happen anytime money is taken out before the account holder reaches an age of 59.5 years old.