401k??

L1: 401k??Another question concerning withdrawals from my 401K before age 55:
If I retire at age 50, leave my 401K money alone until I”m 55, will the 10% penalty be imposed on withdrawals even then?
If you retire/separate before the year you reach age 55, will there always be the 10% penalty up till age 59 1/2 on any withdrawals?
Answers to my previous post did not make this clear. Would I be able to roll the money to an IRA and leave it and then draw from it after reaching age 55 without the penalty? Or, would I have to set it up under a 72t up til age 59 1/2 to avoid the penalty?
Thanks for your help!
Susie-Q
I2007-05-02 13:58, By: susie-q, IP: [139.76.128.68]

L2: 401k??If I retire at age 50, leave my 401K money alone until I”m 55, will the 10% penalty be imposed on withdrawals even then?
If you retire/separate before the year you reach age 55, will there always be the 10% penalty up till age 59 1/2 on any withdrawals?
Would I be able to roll the money to an IRA and leave it and then draw from it after reaching age 55 without the penalty?
Yes,yes and no. Please see myresponse to yourprevious post explaining the age 55 rule.
Jim
2007-05-02 14:07, By: Jim, IP: [24.252.195.14]

L2: 401k??Thanks Jim…..now I understand, although I may not agree…..Susie-Q2007-05-02 14:13, By: Susie-Q, IP: [139.76.128.68]

L2: 401k??I”m not quite sure exactly what you “may not agree with” whether it”s the rules or my previous explaination. But at this point I would suggest that you findsomeone … financial advisor, CPA or tax attorney …that you can sit down with, face-to-face, who canassist you further.
Jim2007-05-02 14:20, By: Jim, IP: [24.252.195.14]

L2: 401k??Jim,
Thanks for the info. Didn”t mean to imply I disagree with you. Susie-q2007-05-03 03:50, By: susie-q, IP: [209.214.106.47]

L2: 401k??I think she accepts the response, but that the news was not what she wanted to hear.
The 3 situations emumerated are also 3 of the situations that result in a 72t plan being a viable way to avoid the early withdrawal penalty.
There is yet another issue to consider. Even if you retire at 55 and therefore avoid the early withdrawal penalty from the plan of that employer, if the plan only offers a lump sum distribution, you have a different problem. While there is no penalty, taking out 5 years of living costs in a single year is going to inflate your tax bracket and the result may be more costly than the penalty. So to benefit from the age 55 exception, the plan must offer some form of installment payments that have some flexibility to them. If they don”t, then you will probably need to transfer to plan to an IRA and set up the 72t plan for 5 years or age 59.5, whichever is longer.2007-05-03 10:07, By: Alan S., IP: [24.116.66.98]