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    jrcamp's Avatar
    jrcamp Posts: 1, Reputation: 1
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    #1

    Mar 22, 2007, 10:51 AM
    Exemption for Early Withdrawal from 401k Penalty
    As I read the IRS publication 575, there is an exemption to the 10% early withdrawal penalty that applies if you "separate from your job in the year you turn 55 or later". It looks like a fairly straight-forward statement, but I see a lot of discrepancy on various internet sites and have even had one of those newspaper financial "experts" state that this is not true. I have even seen one site that added a clause that you had to have been with the company for 5 years, though I can't find this in the IRS code anywhere.

    My situation:
    - 56 years young
    - been with Company A and participated in their 401k program for 2 years

    My questions:
    1. If I should loose my job before I'm 59 1/2, can I withdraw money from the company's 401k plan without incurring the early withdrawal penalty?
    2. Does the rule change if I quit, versus being fired/laid-off?

    Thanks in advance for any insight you can provide.


    Jack
    AtlantaTaxExpert's Avatar
    AtlantaTaxExpert Posts: 21,836, Reputation: 846
    Senior Tax Expert
    		  
    #2

    Mar 26, 2007, 02:31 PM
    Jack:

    In my opinion, if you meet the age criteria, you qualify for the exception.

    But I have NOT thoroughly researched it, and I do NOT have the time to research it until, oh, probably June.
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