Ask Terry Questions Retire at 55 rules

Retire at 55 rules

By Terry Savage on February 27, 2018 |

With the rule of 55 can I make multiple withdrawals from my 401k without the 10% penalty or am I limited to one withdrawal?

Terry Says

You're talking about Rule 72T (named after that section of the tax code).  It allows  “Substantially Equally Periodic Payments”  to avoid the 10% early withdrawal penalty normally due for withdrawals from an individual retirement account, 401(k), TSP, 403(b), or 457 plan prior to age 59 ½.  But you have to follow the rules carefully.  You can't just make a few withdrawals and then stop!   And remember, you'll still owe income taxes.  Even worse, you'll be losing all the future tax-deferred growth in the account.  So this is really not a recommended strategy! Here's a link if you want to learn more about Rule 72T

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