401(k) withdrawals instead of IRA 72t

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L1: 401(k) withdrawals instead of IRA 72tAge 54, retiring this year in July, and will be 55 in October this year. Can someone takewithdrawals in this situation from the 401(k) without penalty rather than transferring the 401(k) to an IRA and setting up a 72t payment? We’d rather take income from the 401(k) until age 59 1/2 and then use the IRA for income at 59 1/2. This will avoid setting up a 72t. What are your thoughts?Thanks.2010-05-20 17:46, By: Bob, IP: []
L2: 401(k) withdrawals instead of IRA 72tShort answer – YES.Longer answer – it depends on the rules of your K-plan. Will the plan allow periodic withdrawals or does it only allow one withdrawal which would be your transfer to an IRA. Check with you HR Department and get a copy of the Plan Document which will specify the rules.Jim2010-05-20 18:34, By: Jim, IP: []

L3: 401(k) withdrawals instead of IRA 72tExplanation of “longer answer”. If your 401-K plan allows periodic withdrawals, then you can start at any time in the calendar year that you WILL BECOME 55, as long as you “SEPARATE FROM SERVICE” in the same calendar year. You will not have to roll any of your 401-K over to an IRA at any time before or after 59 1/2, but after 59 1/2 you can withdraw any amount from -0- to 100% from either a 401-K or an IRA.2010-05-21 02:36, By: dlzallestaxes, IP: []

L4: 401(k) withdrawals instead of IRA 72tIs there a section of the IRS code that you can refer me to in case of a future tax audit regarding this age 55 rule for qualified plans? By the way, does this age 55 provision apply to company pension plans as well? The company pension allows for a lump sum distribution and would like to use a portion of it to pay off home mortgage. Thanks.2010-05-21 03:26, By: Bob, IP: []

L5: 401(k) withdrawals instead of IRA 72tTry IRC section 72 what a surprise. On form 5329, exception number 01 is for “distributions made to an employee who has attained at least age 55, or will attain 55 before 12/31, and “separates from service” during the same calendar year. (by the way, it’s age 50 for qualified public safety employees)Qualified Employer-Sponsored Retirement Plans include :Qualified pension, profit-sharing, stock bonus, and 401-k/403-b plans.SEP (SIMPLIFIED EMPLOYEE PENSION) plansSIMPLE plansAnd several others, including govt plans, but not 457 plans.2010-05-21 03:55, By: dlzallestaxes, IP: []