How to Handle Profit Sharing Distribution

[Rollie]

Plan to retire in 3 years at age 55. Will have about 600K in Profit Sharing. I would like to take 100K to pay off my mortgage. Can I do that without getting the 10% penalty for early withdrawl plus take payments on the remaining amount via 72t.
Thanks,
Rollie

 

[Martha]

This is a 401k profit sharing plan? If so, if you are leaving the job with the plan in the year you turn 55, there will be no penalty on the distributions you take. Of course, you will have to pay income taxes. The 72t rules regarding substantially equal payments won't apply unless you roll the money into an IRA.

http://www.irs.gov/publications/p575/index.html

See this too: http://early-retirement.org/forums/index.php?topic=2044.msg31935#msg31935

 

[FinanceDude]

This is a 401k profit sharing plan? If so, if you are leaving the job with the plan in the year you turn 55, there will be no penalty on the distributions you take. Of course, you will have to pay income taxes. The 72t rules regarding substantially equal payments won't apply unless you roll the money into an IRA.

http://www.irs.gov/publications/p575/index.html

See this too: http://early-retirement.org/forums/index.php?topic=2044.msg31935#msg31935

Just noticed the thread................Martha beat me to it............

 

[Rollie]

Thanks for the info!