[stinger]

My husband just retired from trucking. He closed out his 401k, and received the money. We were told we did not have to pay the penalty because he was ret. And is 551/2 yrs old . Now he is going stir crazy and wants to get a local non driving job. If he goes to work will we then have to pay the penalty.

[ebaines]

No, he won't have to pay the penalty. The early withdrawal penalty is based on the person's age only - not whether they are retired ot not. You avoid the early withdrawal penalty if either (a) you are 59-1/2 or older, or (b) you make the withdrawal from a plan where you were "separated from service" in or after the year you turn 55 (N.B. there are other exceptions that may apply for young people to avoid the penalty, but they are not germane here). Note that there could be any number if reasons you were "separated from service" - perhaps you quit, were fired, retired, the company went out of business, etc - it really doesn't matter why you were separated, just so long as it happens in the year you turn 55 or later. So your husband can indeed start another job and still take his 401(k) from his former employer's plan and he does not have to pay the early withdrawal penalty.