 |
|
07-22-2014, 02:04 PM
|
#1
|
|
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
Join Date: May 2008
Posts: 5,214
|
The rule of 55?
Have you ever heard of the "rule of 55"? That you can withdraw money out of 401K if you are over 55 and no longer working (quit and retired or laid off and retired)?
Any gotcha's?
|
|
|
 |
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!
|
|
07-22-2014, 02:12 PM
|
#2
|
|
Thinks s/he gets paid by the post
Join Date: Sep 2013
Location: Cincinnati, OH
Posts: 4,373
|
I think you are referring to the rule of 72t, which enables you to take equal payments from your pre-tax accounts. Search for 72t and you will find more info. Or some other replies may provide better details than I can, I am not an expert on it.
__________________
The problem isn't artificial intelligence, it's natural stupidity.
You can't spend yourself to prosperity.
Semi-Retired 7/1/16: working part-time (60%) for now [4/24/17 changed to 80%]
Retired Aug 2, 2017; age 53
|
|
|
|
|
07-22-2014, 02:13 PM
|
#3
|
|
Thinks s/he gets paid by the post
Join Date: Jul 2012
Location: Mississippi
Posts: 1,894
|
It's been mentioned in several threads recently. One catch is that IRS allows it but all 401k plans don't. IRS pub 575 is the source.
https://www.expertplan.com/articles/a022001.jsp
|
|
|
|
|
07-22-2014, 02:17 PM
|
#4
|
|
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
Join Date: Apr 2013
Posts: 11,078
|
 Quote:
Originally Posted by tmm99
Have you ever heard of the "rule of 55"? That you can withdraw money out of 401K if you are over 55 and no longer working (quit and retired or laid off and retired)?
Any gotcha's?
|
Yes your SPD(Summary Plan Description) must allow for withdrawls at age 55, not all do. Some allow for withdrawls but limit the number. Get a copy from your HR or benefits department.
Sent from my SAMSUNG-SGH-I337 using Early Retirement Forum mobile app
|
|
|
|
|
07-22-2014, 02:19 PM
|
#5
|
|
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
Join Date: Feb 2011
Location: NC Triangle
Posts: 5,807
|
I think rbmrtn references the right thing: you can take withdrawals penalty-free from a 401(k) type plan if you leave employment in the year you turn 55, but the employer has to allow it.
__________________
|
|
|
|
|
07-22-2014, 02:20 PM
|
#6
|
|
Thinks s/he gets paid by the post
Join Date: Jun 2010
Posts: 2,139
|
Yes, there are rules regarding being able to withdraw from your 401K when you are 55. The exception to the 10% tax rule includes: when distributions are 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
__________________
And whatever your labors and aspirations in the noisy confusion of life, keep peace in your soul. With all its sham, drudgery, and broken dreams, it is still a beautiful world. Be cheerful. Strive to be happy.- Desiderata by Max Ehrmann
|
|
|
|
07-22-2014, 02:22 PM
|
#7
|
|
Thinks s/he gets paid by the post
Join Date: Nov 2011
Posts: 3,901
|
Such withdrawals are not allowed from a 401k originating with an employer for which you stopped working before age 55.
|
|
|
|
|
07-22-2014, 02:24 PM
|
#8
|
|
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
Join Date: Jun 2005
Posts: 10,252
|
It's such a well-known feature of many 401(k) plans that pretty much the entire early-retired kingdom knows about it. The OP must live in another kingdom.
|
|
|
|
|
07-22-2014, 02:28 PM
|
#9
|
|
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
Join Date: Feb 2011
Location: NC Triangle
Posts: 5,807
|
The rule of 55?
Quote:
Originally Posted by LOL!
It's such a well-known feature of many 401(k) plans that pretty much the entire early-retired kingdom knows about it. The OP must live in another kingdom.
|
Well, it is kind of confusing...
I've learned a lot here - that's why a person asks!
__________________
|
|
|
|
|
07-22-2014, 02:38 PM
|
#10
|
|
Thinks s/he gets paid by the post
Join Date: Apr 2006
Posts: 1,684
|
Quote:
Originally Posted by steelyman
Well, it is kind of confusing...
I've learned a lot here - that's why a person asks!
|
Ya know, Steely, some people were born knowing everything. The rest of us have to ask. 
|
|
|
|
|
07-22-2014, 02:43 PM
|
#11
|
|
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
Join Date: Feb 2011
Location: NC Triangle
Posts: 5,807
|
The rule of 55?
That's funny! May I call you Rusty? (you can call me that too - I'm retired!). You can call me Steely (or you can call me Al).
__________________
|
|
|
|
|
07-22-2014, 02:43 PM
|
#12
|
|
Thinks s/he gets paid by the post
Join Date: Apr 2012
Posts: 2,929
|
+1. You beat me to it.
I feel sorry for people who must carry the burden of perfection on their shoulders, while we mere mortals scrape by as best we can.......
__________________
"Do not spoil what you have by desiring what you have not; remember that what you now have was once among the things you only hoped for." - Epicurus
|
|
|
|
|
07-22-2014, 02:48 PM
|
#13
|
|
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
Join Date: May 2013
Location: Les Bois
Posts: 5,761
|
you generally have to "retire" at 55
__________________
You can't be a retirement plan actuary without a retirement plan, otherwise you lose all credibility...
|
|
|
|
|
07-22-2014, 02:50 PM
|
#14
|
|
Thinks s/he gets paid by the post
Join Date: Nov 2012
Location: Madeira Beach Fl
Posts: 1,403
|
Beware the penalty box.
__________________
_______________________________________________
"A man is a success if he gets up in the morning and goes to bed at night and in between does what he wants to do" --Bob Dylan.
|
|
|
|
|
07-22-2014, 04:03 PM
|
#15
|
|
Thinks s/he gets paid by the post
Join Date: Apr 2006
Posts: 1,684
|
Quote:
Originally Posted by Big_Hitter
you generally have to "retire" at 55
|
I'm not sure one has to "retire". I believe the requirement is that you terminate employment from the employer where you have the 401K in the year you turn 55 or later, but that does not keep you from starting with another employer.
Of course, as has been stated by others, the 401K plan must allow this "55" thing.
|
|
|
|
|
07-22-2014, 04:10 PM
|
#16
|
|
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
Join Date: May 2008
Posts: 5,214
|
Quote:
Originally Posted by LOL!
It's such a well-known feature of many 401(k) plans that pretty much the entire early-retired kingdom knows about it. The OP must live in another kingdom.
|
OUCH!!!
Some of the unfortunate have to wo*k and don't have time to read a lot of posts....
|
|
|
|
|
07-23-2014, 05:42 AM
|
#17
|
|
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
Join Date: Feb 2006
Location: Washington, DC
Posts: 11,328
|
LOL didn't take his nap today
__________________
Idleness is fatal only to the mediocre -- Albert Camus
|
|
|
|
|
07-23-2014, 07:35 AM
|
#18
|
|
Full time employment: Posting here.
Join Date: Feb 2014
Posts: 731
|
Quote:
Originally Posted by Rustward
I'm not sure one has to "retire". I believe the requirement is that you terminate employment from the employer where you have the 401K in the year you turn 55 or later, but that does not keep you from starting with another employer.
Of course, as has been stated by others, the 401K plan must allow this "55" thing.
|
And - one must be persistent in confirming this.
When I asked a representative for my 401k plan, at first they said it was not allowed because it was not allowed by 'law'.
When I persisted and showed the excerpt from the irs publication 575, I then got an apology and a confirmation that yes, my plan does allow this.
|
|
|
|
|
07-23-2014, 09:39 AM
|
#19
|
|
Recycles dryer sheets
Join Date: Jun 2014
Posts: 406
|
Quote:
Originally Posted by Big_Hitter
you generally have to "retire" at 55
|
Please tell my wife 
Quote:
Originally Posted by steelyman
I think rbmrtn references the right thing: you can take withdrawals penalty-free from a 401(k) type plan if you leave employment in the year you turn 55, but the employer has to allow it.
|
I know I could do the research but I'm lazy today...If I have a 401K and roll it to an IRA does the rule still apply? Not that I will necessarily use it when I am less than 591/2 but I like to know all my options
__________________
If money is the root of all evil I want to be a bad man
|
|
|
|
|
07-23-2014, 09:54 AM
|
#20
|
|
Full time employment: Posting here.
Join Date: Feb 2014
Posts: 731
|
Quote:
Originally Posted by nuke_diver
Please tell my wife
I know I could do the research but I'm lazy today...If I have a 401K and roll it to an IRA does the rule still apply? Not that I will necessarily use it when I am less than 591/2 but I like to know all my options |
No. If you roll it to an IRA, you now have to wait until 59 1/2, unless you can live with the 10% withdrawal penalty.
That it is why, sometimes it is 'better' to leave your 401k where it is.
|
|
|
|
|
|
|
Currently Active Users Viewing This Thread: 1 (0 members and 1 guests)
|
|
|
| Thread Tools |
|
|
| Display Modes |
 Linear Mode
|
Posting Rules
|
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts
HTML code is Off
|
|
|
Similar Threads
|
| Thread |
Thread Starter |
Forum |
Replies |
Last Post |
|
4% Rule
|
Jake |
FIRE and Money |
78 |
10-23-2003 07:50 AM |
|
$50.00 per day rule
|
MRGALT2U |
FIRE and Money |
18 |
08-04-2003 04:12 AM |
|
» Recent Threads
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
» Quick Links
|
|
|
