72t and age 55 rule 401k

L1: 72t and age 55 rule 401kIn 9/2000 I retired from my company after 25 yrs. I recieved a lump sum pension and my 401k distribution which I rolled into 3 seperate and distinct IRAS. In 2001 I started SEPP distributions from 2 of the IRAS. 10/2002 I had an opportunity to return to the same company and when I did I started a 401k again. My plan is to work another year and I will have accumulated about 80k in my 401k. Since I will be 55 this August can I withdraw the 80k and just pay the tax avoiding the 10% penalty. Will this set off any alarms with my sepp distributions??Your site is the best . I follow it almost daily since 2000.Thanks very much for your help2005-04-27 19:14, By: ed, IP: [152.163.100.202]
L2: 72t and age 55 rule 401kHi Ed:
When you went back to work with your old company and started the K-plan again, did you transfer back the stand alone IRA? If you didn’t contribute anything to this IRA since the rollover, it can be be transferred back, which will increase the amount. Then when you retire after attaining age 55, you will be allowed to withdraw from the K-plan without having to deal with the 10% penalty.
Jim2005-04-28 08:54, By: Jim, IP: [70.184.1.35]

L2: 72t and age 55 rule 401kJim….I didnt transfer any money from the 3 IRAS back into the 401k. The 80 k that I will have accumulated by years end are new contributions made since 10/02. If I read you right and can withdraw this 80k penalty free when I decide to leave the company again…my only concern was that the 401k was with the same company that I retired from in 2000.Thanks Ed2005-04-28 09:17, By: Ed, IP: [64.12.116.202]

L2: 72t and age 55 rule 401kOK Ed. Very Good. Yes, you can take the money out free of the 10% penalty in your scenario… but don’t forget it will then all be taxable and I guess that could be some type of penalty.
The point I was trying to make is the money you moved into IRA # 3 from the K-plan can probably be moved back if you so desire, and you haven’t “comingled” new money with the rollover money. I think the IRS has done away with the term “conduit IRA” but the concept is still valid. Sometime it is advantageous to do an IRA Rollover from a company plan to an IRA, and then at a later date when the individual gets a new job … can be with the same company … and they want to move the Rollover IRA money back into the K-plan environment they have that option. Personally, there would have to be a really good reason to do this procedure, and your case could be that time if you needed to get money and not have to deal with the early distribution penalty. If your current contributions will generate the $80k you need then I see no reason to make the transfer.
Jim2005-04-28 11:13, By: Jim, IP: [70.184.1.35]