A 401(k) Can Be Penalty Free Before Age 59.5
NEW BERLIN, Ill. (TheStreet) -- Did you realize there is a provision within the Internal Revenue Code that allows you to start taking distributions from your 401(k) plan before you reach age 59.5? This little-known section of the code, §72(t)(2)(A)(v), can be a real dandy if you happen to fit the requirements.
Here's how it works: If you're participating in your company's 401(k) plan and decide to leave employment at any time during or after the year you reach age 55, there will be no penalty for taking distributions from the plan. Normally, any distribution (other than specifically-qualified distributions such as rollovers) before age 59.5 would result in a 10% penalty.
|Early access to a 401(k) is available in certain cases, easing the way toward a better-funded retirement.|
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