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ON Retirement PLANS AND Planning
By Dr. David E. Marcinko MBA CMP®
SPONSOR: http://www.CertifiedMedicalPlanner.org
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Taking a distribution from a tax qualified retirement plan, such as a 401(k), prior to age 59 1/2 is generally subject to a 10 percent early withdrawal tax penalty.
However, the IRS rule of 55 may allow you to receive a distribution after attaining age 55 (and before age 59 1/2 ) without triggering the early penalty if your plan provides for such distributions.
What is the rule of 55? https://www.experian.com/blogs/ask-experian/what-is-the-rule-of-55/
The distribution would still be subject to an income tax withholding rate of 20 percent, however. (If it turns out that 20 percent is more than you owe based on your total taxable income, you will get a refund after filing your yearly tax return.)
CITE: https://www.r2library.com/Resource/Title/0826102549
It’s important to note that the rule of 55 does not apply to traditional or Roth IRAs.
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Filed under: Investing, Retirement and Benefits, Touring with Marcinko | Tagged: 401-k pklan, David Edward Marcinko, IRA, retirement planning, Roth IRA, Rule of 55 |
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The rule of 55 is an IRS provision that allows workers who leave their job for any reason to start taking penalty-free distributions from their current employer’s retirement plan once they’ve reached age 55. It allows those looking to retire earlier than normal or those who need the cash flow a way to take distributions from their retirement plans sooner than is typically allowed.
Taking a distribution from a tax-qualified retirement plan, such as a 401(k), prior to age 59 1/2 is generally subject to a 10 percent early withdrawal tax penalty. However, the IRS rule of 55 may allow you to receive a distribution after reaching age 55 (and before age 59 1/2 ) without triggering the early penalty if your plan provides for such distributions.
Any distribution would still be subject to an income tax withholding rate of 20 percent, however. (If it turns out that 20 percent is more than you owe based on your total taxable income, you’ll get a refund after filing your yearly tax return.).
Related: https://www.msn.com/en-us/money/retirement/what-is-the-rule-of-55-and-how-does-it-work/ar-AAOu69h?li=BBnbfcL
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