401(k)-separation at 55-will this work?

L1: 401(k)-separation at 55-will this work?I will turn 55 in 2009, which should give me access to my 401(k) without penalty if I quit at that time. If i cut back to a part time basis between now and then (which technically wouldn”t qualify for the 401(K)), but don”t completely quit until 2009, would my separation date be 2009, or the day that i go to part time?
I also understand that the 55 rule only applies to the LAST plan that you separate from. So, in a different scenario, what if I take on ANOTHER part time job, in addition to the current part time job?Would I have to be sure that the new job does not provide 401(k) benefits in order to insure my access to my current plan when i quit?
Thanks for any help you can give me!
2007-04-23 08:02, By: tutgolf, IP: [63.173.8.138]

L2: 401(k)-separation at 55-will this work?Your first question is plan specific based on how many hours you must work to still be considered active. You cannot assume that not being eligible to contribute is exactly the same threshold that constitutes separation. You will have to check with the plan administrator. Your separation date would be after the latest date that you were still considered to be active. It”s also possible to become separated, take some penalty free withdrawals, then later become active again.
WIth respect to your second question, your status with respect to a second part time job with 401k plan access does not affect penalty free distributions you could get from a different plan from which you separated at 55. Each position stands on it”s own.
With respect to your current job, you should determine what distribution options are offered after separating. A lump sum only option usually does no good, because the benefits of the penalty waiver are offset by having to take too much income in a single year and possibly inflating your tax bracket.

2007-04-23 14:46, By: Alan S., IP: [24.116.66.98]