I really only joined to find an answer to one question.

[AmartA]

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.

[travelover]

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.

[brewer12345]

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.

[ziggy29]

Quote:

Originally Posted by travelover 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.

[REWahoo]

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

[AmartA]

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!

[travelover]

Quote:

Originally Posted by AmartA 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.

[martyb]

That is the case for federal employees like myself. I would imagine it would be the same for everybody else as well.