Tap Your 401(k) Plan Early Without Penalty
If you participate in a traditional employer-sponsored retirement plan, such as a 401(k) or 403(b) plan, you’re likely aware that you generally can’t withdraw the funds before age 59½. Your plan may allow early withdrawals under certain circumstances — financial hardship, for example — but in most cases these withdrawals are subject to ordinary income tax plus a 10% penalty.
There are some exceptions, however, that allow you to withdraw funds early without penalty, if your plan allows it (although you’ll still have to pay tax). One is the “rule of 55,” which allows you to take penalty-free withdrawals in the year you turn 55 (or later) if you retire early or otherwise leave your job and meet certain other requirements. Another exception allows you to avoid penalties if you leave your job and take a series of substantially equal periodic payments over your life expectancy or the joint life expectancies of you and your designated beneficiary.
This material is generic in nature. Before relying on the material in any important matter, users should note date of publication and carefully evaluate its accuracy, currency, completeness, and relevance for their purposes, and should obtain any appropriate professional advice relevant to their particular circumstances.
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