Join Early Retirement Today
Reply
 
Thread Tools Search this Thread Display Modes
I really only joined to find an answer to one question.
Old 09-07-2011, 05:06 PM   #1
Confused about dryer sheets
 
Join Date: Aug 2011
Posts: 2
I really only joined to find an answer to one question.

Hi, I am new this forum and have enjoyed lurking so far, and I'm finally getting some time to post my first thread. I really joined primarily to find the answer to one question, but I can tell already that there will be many more to come. My question: I read many articles that say that a 401K is available 10%-penalty free as long as one is 55 years old when leaving one's employer. But I also have read articles that state one does not necessarily need to be 55, but merely needs to leave the employer in the year one turns 55. Subtle difference, I know, but it can make about 11 months of difference next year for me. Which is correct? (I'm not really interested in doing "substantially equal withdrawals" method). Thanks in advance for your help and expertise.
__________________

__________________
AmartA is offline   Reply With Quote
Join the #1 Early Retirement and Financial Independence Forum Today - It's Totally Free!

Are you planning to be financially independent as early as possible so you can live life on your own terms? Discuss successful investing strategies, asset allocation models, tax strategies and other related topics in our online forum community. Our members range from young folks just starting their journey to financial independence, military retirees and even multimillionaires. No matter where you fit in you'll find that Early-Retirement.org is a great community to join. Best of all it's totally FREE!

You are currently viewing our boards as a guest so you have limited access to our community. Please take the time to register and you will gain a lot of great new features including; the ability to participate in discussions, network with our members, see fewer ads, upload photographs, create a retirement blog, send private messages and so much, much more!

Old 09-07-2011, 05:27 PM   #2
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
travelover's Avatar
 
Join Date: Mar 2007
Posts: 9,896
I'm pretty sure it is when you leave in the year that you turn 55. That was my case - I left at age 54, turned 55 later that year.
__________________

__________________
Yes, I have achieved work / life balance.
travelover is online now   Reply With Quote
Old 09-07-2011, 05:31 PM   #3
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
brewer12345's Avatar
 
Join Date: Mar 2003
Posts: 16,391
The man in the forest said to me,
"How many strawberries grow in the sea?"
I answered him as I thought good,
"As many herrings swim in the wood."

I have no idea what the answer to your question is, but welcome.
__________________
"There are three kinds of men. The one that learns by reading. The few who learn by observation. The rest have to pee on the electric fence for themselves."



- Will Rogers
brewer12345 is offline   Reply With Quote
Old 09-07-2011, 05:35 PM   #4
Moderator
ziggy29's Avatar
 
Join Date: Oct 2005
Location: Texas
Posts: 15,612
Quote:
Originally Posted by travelover View Post
I'm pretty sure it is when you leave in the year that you turn 55. That was my case - I left at age 54, turned 55 later that year.
Yes, this is my understanding as well. So you could sever employment as early as January 1 of the tax year in which you reach 55, while you are still 54 and change.
__________________
"Hey, for every ten dollars, that's another hour that I have to be in the work place. That's an hour of my life. And my life is a very finite thing. I have only 'x' number of hours left before I'm dead. So how do I want to use these hours of my life? Do I want to use them just spending it on more crap and more stuff, or do I want to start getting a handle on it and using my life more intelligently?" -- Joe Dominguez (1938 - 1997)

RIP to Reemy, my avatar dog (2003 - 9/16/2017)
ziggy29 is offline   Reply With Quote
Old 09-07-2011, 05:47 PM   #5
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
REWahoo's Avatar
 
Join Date: Jun 2002
Location: Texas Hill Country
Posts: 42,117
From the IRS website:

Quote:
Tax on early distributions. If a distribution is made to a participant before he or she reaches age 59½, the participant may be liable for a 10% additional tax on the distribution. This tax applies to the amount received that the employee must include in income.

Exceptions. The 10% tax will not apply if distributions before age 59½ are made in any of the following circumstances:

  • Made to a participant after separation from service if the separation occurred during or after the calendar year in which the participant reached age 55.
401(k) Resource Guide - Plan Sponsors - General Distribution Rules
__________________
Numbers is hard

When I hit 70, it hit back

Retired in 2005 at age 58, no pension
REWahoo is offline   Reply With Quote
401K at 54.1 it is!
Old 09-08-2011, 08:30 AM   #6
Confused about dryer sheets
 
Join Date: Aug 2011
Posts: 2
401K at 54.1 it is!

Thanks everyone for your replies. That was a big help. I thought the answer was in the year that I turn 55, but I see so many articles that misstate it that I start to doubt. Wouldn't want to make a mistake at this critical juncture. Thanks again!
__________________
Plotting early retirement
AmartA is offline   Reply With Quote
Old 09-08-2011, 09:06 AM   #7
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
travelover's Avatar
 
Join Date: Mar 2007
Posts: 9,896
Quote:
Originally Posted by AmartA View Post
Thanks everyone for your replies. That was a big help. I thought the answer was in the year that I turn 55, but I see so many articles that misstate it that I start to doubt. Wouldn't want to make a mistake at this critical juncture. Thanks again!
There is a wealth of info at the IRS site. I was just too lazy to go there for you......definitely where I start when I have a question of my own.
__________________
Yes, I have achieved work / life balance.
travelover is online now   Reply With Quote
Old 09-08-2011, 09:18 AM   #8
Thinks s/he gets paid by the post
martyb's Avatar
 
Join Date: Nov 2006
Location: Bossier City
Posts: 2,182
That is the case for federal employees like myself. I would imagine it would be the same for everybody else as well.
__________________

__________________
“Change is the law of life. And those who look only to the past or present are certain to miss the future.”
-John F. Kennedy

“Hard work never killed anybody, but why take a chance?” - Edgar Bergen
martyb is offline   Reply With Quote
Reply

Tags
401k, penalty-free withdrawals


Currently Active Users Viewing This Thread: 1 (0 members and 1 guests)
 
Thread Tools Search this Thread
Search this Thread:

Advanced Search
Display Modes

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is On
HTML code is Off
Trackbacks are Off
Pingbacks are Off
Refbacks are Off


Similar Threads
Thread Thread Starter Forum Replies Last Post
Question for the Real Estate investors out there harley FIRE and Money 42 09-05-2011 06:19 PM
Question for the expats MichaelB FIRE and Money 45 09-02-2011 01:44 PM
A question from my sister Nuiloa Other topics 16 08-24-2011 12:10 PM
Question re: best way to invest "extra cash" Lisa99 FIRE and Money 21 08-10-2011 03:25 PM
Firecalc Inflation question frugalhen FIRECalc support 1 07-05-2011 12:48 PM

 

 
All times are GMT -6. The time now is 11:33 PM.
 
Powered by vBulletin® Version 3.8.8 Beta 1
Copyright ©2000 - 2017, vBulletin Solutions, Inc.