Yes. As Opus states above, to not pay a 10% penalty for early withdrawal from a 401k, you must be 59-1/2, or you separated from service from that employer in the year you turn 55 or older. The separation of service rule states that if an employee, who is participating in a company retirement plan such as a 401(k) plan, leaves the employer during the year in which they turn age 55 or older, distributions from the retirement plan are not subject to the additional 10 percent tax penalty. @Rodger4
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