Can I withdraw 401k money at 55 without penalty?
Answers
2083 points
alanj answered one year ago …
For most people no. The minimum age for most people is 59 and a half. There are exceptions. Click on the following link to find if you qualify for the exception http://www.tickerhound.com/articles/detail/20080389158e2 Go down to number 4 heading where it explains withdrawal penalties.
Read more from alanj2083 points
alanj answered one year ago …
For most people no. The minimum age for most people is 59 and a half. There are exceptions. Click on the following link to find if you qualify for the exception http://www.tickerhound.com/articles/detail/20080389158e2 Go down to number 4 heading where it explains withdrawal penalties.
Read more from alanj2830 points
Oldman answered one year ago …
If you quit working, you can take a 72t withdrawal, in which the amount withdrawn must be calculated as a series of "equal" dollar amounts/yr for at least 5 years or until age 59.5, when a penalty-free withdrawal can occur. These are calculated as if they were annuity payments. The details are at the IRS site, and under these circumstances, an early withdrawal penalty won't be assessed, but income taxes will be on the yearly withdrawals.
In case the 401k rules set up by your plan administrator prevent this "early withdrawal of substantially equal payments without penalty" approach, you have the option of a trustee-trustee direct transfer to an IRA, which allows the same withdrawal strategy.
Never cash out the 401k and plan to put the $ into an IRA, because the laws require a minimum tax withheld of 20%, and it must be completed within 60 days...or it's all taxable. The withheld taxes (say $20k on a $100K cashout), must be paid back in, out-of-pocket, because otherwise, you aren't rolling the "whole" distribution over to the IRA. Next year, the 20 K taxes that were withheld, if you pay the 20 K withheld back into the IRA, will be a Fed. tax credit, but that's an unneccessary cost, and if the rollover takes longer than 60 days, you will be taxed on the whole amount, and you won't have it back in a shelter at all.
