Exemption for Early Withdrawal from 401k Penalty
Asked Mar 22, 2007, 11:51 AM
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.
- 56 years young
- been with Company A and participated in their 401k program for 2 years
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.