Thinking about returning to work after FIRE

[Al18]

I retired 15 months ago at age 56. The world changed a lot in the past 15 months - so I applied for a full-time job today! Maybe I just have cabin fever, but there must be something more productive for me to do.


I used the 'rule of 55' to withdraw some money out of my 401K the beginning of 2019 and 2020 for living expenses under the 'separation of service' exemption. 20% Federal taxes and 3% state taxes were withheld.

Would there be a penalty if I went to work at a different company in 2020? After I withdrew money for 2020, I decided to close the 401K and transfer all funds in kind to a rollover IRA - as I have 7 years of expenses in CD's.



Advice welcome.

 

[cooch96]

I think it’s noble to be productive. So good for you, I hope you find satisfaction.

As far as your tax question, I’m sure someone more competent than me will chime in.

 

[ckelly78z]

The way I understood the "rule of 55", that you could withdraw funds from a 401K without penalty if you didn't work again. I don't know what the penalties may be if you get another job making over a certain dollar figure.

 

[2017ish]

Looks like no penalty. I've scanned the pertinent parts of IRS site to confirm my original understanding, and the emphasis is simply on the separation from service and age 55. Here is a Forbes article written by a CFA that concurs: https://www.forbes.com/sites/forbes...55-help-you-plan-for-retirement/#5a961feec6eb

Good luck on starting back up. Didn't work at all for me when I did a short contracting stint within 6 months of retirement--but nothing had changed for me other than getting the taste of lengthy travel. Obviously, that wouldn't apply right now!

 

[GravitySucks]

I had no penalty when I went back to a contract job 2 years after starting withdrawal under the rule of 55.

 

[Al18]

Thanks for the advice - looks like I dodged the penalty bullet!

 

[Sunset]

OP - We thank you in advance for your desire to continue to support SS

 

[Rambler]

I’m pretty sure I’ll be going back to work when the current situation blows over. I’d already been thinking about it. We bought an RV in ‘15, and we’re out in it about 75 days that year, as was the plan for subsequent years, but the DW got sick in ‘16, I got cancer in ‘17, we decided to move 750 miles away in ‘18, the house didn’t sell until late ‘19, and now this. So, we’re gonna downsize to a travel trailer or a small C class and just do shorter trips, or just sell it altogether and stay in hotels if we decide to go somewhere. If I can’t travel like I wanted, I may as well work cuz I’m bored with staring at my now downsized backyard and the iPad screen.