Rule of 55 and returning to same employer

[Hopeful]

I have searched the internet, and could not find an answer to this question. Let's say someone separates from service in the year they turn 55, and then starts to withdraw funds from their 401k/403b penalty free under the rule of 55. That person then, at some point, returns to that employer as a rehire on a casual basis. Is this allowed? Is there some sort of minimum time they have to be gone from the employer? My guess is the IRS does not allow this, but I know some people have retired and were required to not return until after 6 months. My guess is this had something to do with the pension and not the rule of 55 though.

 

[zinger1457]

There shouldn't be any issue returning to work. Is your plan to continue taking 401K withdrawals when you go back to work? It is allowed but pretty sure you would have to keep the 401K plan that you're taking withdrawals from separate from any new 401K plan.

 

[Hopeful]

There shouldn't be any issue returning to work. Is your plan to continue taking 401K withdrawals when you go back to work? It is allowed but pretty sure you would have to keep the 401K plan that you're taking withdrawals from separate from any new 401K plan.

If allowed, the plan would be to continue to use the rule of 55 to withdraw funds prior to 59.5. No new 403b would be started.

 

[Hopeful]

The more I think about it, it would probably be disallowed by the plan as it would then be considered an in service withdrawal.