distributions from an old 401k plan at age 55
I have a 401k plan from a previous employer; I left employment in my 40s to become a stay-at-home mom, but continued in the plan because it was doing well. Is it possible to take penalty-free monthly distributions at age 55 if I am no longer employed and am not retiring? Everything I read only seems to mention a person who is retiring in the year they turn 55.
Thanks!
Terry Says: Well, yes, you can do that kind of “substantially equal” withdrawals over your life expectancy, starting at age 55, if you have left your employment. It’s called Rule 72T. But don’t do it!!! This is money that can continue to grow tax-deferred until you are age 70-1/2 — and that could mean a lot of tax-deferred growth over the net 15 years! If you aren’t happy with the old 40l(k) plan investment choices, do a rollover to Fidelity or Vanguard or T. Rowe Price and they will advise you on an appropriate mix of funds for your situation. This is a real opportunity to build savings for your “old age” — IF you have the self-discipline to not touch it until required withdrawals being at age 70-1/2.