@Libbylee wrote:
I redrew the money from the former employee (that went bankrupt) and placed it with a new financial institution then I redrew money from it a few months later to live until I found another job!
I think you screwed up.
If what you are saying is, you:
#1 rolled over the 401k to an IRA at your own broker of choice, and then
#2 withdrew money to live on from the IRA
then you lost the 10% penalty exception. The age limit for an IRA is 59-1/2. The age limit for a 401k is also 59-1/2, or 55 if you are 55 or older when you leave the company. But that only applies to the 401k. Once you move the money to the IRA, you lose the protection of that special rule.
