Rule of 55 and Part-Time Work

[timdow]

I'm 56, and plan on shedding the full-time job next year. I also plan on using "Rule of 55" to bridge the gap until 59.5. I have verified that my current employer's plan supports non-lump sum withdrawals.

I understand that 20% will probably be held back from my distributions for taxes, some of which may be recovered when filing taxes. This actually can be viewed as a good thing in a way, as I will not need to do quarterly IRS payments.

i have read online that I can take "Rule of 55" distributions, then get another job and still receive the distributions from my former employers plan.

I cannot seem to find anything about having two jobs (one full and one part-time in my case). I plan to shed the full-time job and keep the part-time job.

So for "Rule of 55" distributions, is my part-time job going to be an issue?

Are "Rule of 55" distributions allowed for a former employers plan even when employed by a new employer, or do you have to invoke the "Rule of 55" when between jobs?

 

[SevenUp]

I understand that 20% will probably be held back from my distributions for taxes....

You may be able to specify an amount or percentage for withholding (both federal and state if applicable). Probably worth checking before taking the distribution.

Are "Rule of 55" distributions allowed for a former employers plan even when employed by a new employer

Yes. See p. 36 of https://www.irs.gov/pub/irs-pdf/p575.pdf: if you have "separated from service" from the employer who provided the 401k, you are all set.