401K distribution at 55 years old

L1: 401K distribution at 55 years oldGreetings:Do the rules regarding 401K plans” early distribution vary among plans? From what I am finding on the web, it is legal and common to retire from a company at 55 years of age and take funds from a 401K instead of waiting to reach 59.5 years of age.2006-12-28 11:42, By: cib258, IP: [68.57.68.27]
L2: 401K distribution at 55 years oldIf you retire at or after attained age 55, you may take distributions from your K-plan without incurring any penalty. You will only pay taxes on the distributions at your marginal tax rate. If you rollover from the K-plan to an IRA, then IRA rules apply and that triggers the age 59 1/2 rules. Formore detailed information, check out the discussion 4 items below your post with the subject 401K periodic withdrawals after age 55. Also check out the FAQ”s on this site.
Jim2006-12-28 12:13, By: Jim, IP: [70.184.2.72]

L2: 401K distribution at 55 years oldIt appear that, from a 401K, one can take the money without the 10 percent tax penalty if one is 55 years old. I got into my company”s and my wife”s company”s plan details online and, after some careful reading, found that you are indeed correct.Much thanks.2006-12-28 14:53, By: cib258, IP: [68.57.68.27]

L2: 401K distribution at 55 years oldYes, there is no early withdrawal penalty, and the company must give you access to the funds because you have separated from service. The critical issue is what options the company will provide in the way of installments to get you to 59.5. If they require a lump sum, your inflated marginal tax rate on a large distribution will offset any benefit from escaping the penalty. Ideally, they will offer an installment option that has some flexibility to it that you can use to get you to 59.5. Then you can transfer the remainder to a traditional IRA from which you can take as little or as much as you want until you are 70.5.
Remember, the options the company offers on installments has nothing to do with the IRS, it is totally determined by the plan provisions. Good luck, and check this out.2006-12-28 16:47, By: Alan S., IP: [24.116.66.98]

L2: 401K distribution at 55 years oldAlan, thanks. I”m having trouble getting the details on that. Both company”s accounts are managed by Fidelity and their (usually outstanding) web-based system only let”s one see what is allowable now. I”ll make a phone call and see what the companies set up. Thanks for the tip.2006-12-28 18:57, By: cib258, IP: [68.57.68.27]

L2: 401K distribution at 55 years oldWhen you call your and your wife”s company HR Department, ask for a copy of the Plan Document for the 401(k). While both companies use Fidelity as the K-plan custodian, each company”s Plan Document dictates how each plan operates and what distribution options you have. Don”t expect to find each company plan to be identical.
The tax code, managed by the IRS, sets out the basic rules for operating K-plans. However,each company structurestheir planto fit their own parameters within the boundaries of the code.
Jim2006-12-29 08:54, By: Jim, IP: [70.184.2.72]

L2: 401K distribution at 55 years old
My company says it follows IRS rules and you can not withdraw funds froma 401k until 59.5 and separated from service without penalty. Where is the IRS ruleand what is it”s ID number thatsaysI can take fundsat 55 without penalty or does it have to be set up in a 72T.2007-01-15 11:33, By: MARCAM, IP: [38.152.142.124]

L2: 401K distribution at 55 years oldMarcam:
Please read my post to “cib258″ that is immediately above your post. If you will call your company HR Dept and ask for a copy of the Plan Document, I think you will find what you are looking for. It sounds like the person you are talking with hasn”t read this document. Since the custodian provides this document to the company, and includes the features the company is allowed to add, then the document should contain the relevant IRS Code provisions. One of these provisions allows a person who has either retired or separated from the company during the year he / she turns age 55 or older to withdraw funds without the 10% early withdrawal penalty.
However, the company may specify how you withdraw the funds. They may only allow a single lump sum, a partial lump sum along with rolling over to an IRA, or they may allow some form of periodic withdrawals for several years. If you can take periodic withdrawals, then you will be able to leave the funds in the K-plan until your age 59 1/2 at which time you would process the IRA Rollover and begin withdrawals from the IRA.
Jim2007-01-15 12:52, By: Jim, IP: [70.184.2.72]