@Libbylee wrote:
OMG!! Does this applies even if I moved the 401k from one institution to another 401k in another institution!!!!
You may need to clarify what you actually did, but the answer is likely yes, you lost the protection. The rule is that you can withdraw if you are 55 or older when you separate from the plan sponsor. For example, I am over 55, and I have a 403b plan with my old employer (A) and a separate 403b plan from my new employer (B). Even though I am over 55, I can't withdraw from plan A without a 10% penalty because I was not 55 when I separated from employer A.
Once you rollover the money to an IRA, it's not a 401k any more. IRA technically means "individual retirement arrangement" and for tax purposes, all your IRAs are treated as one single plan (arrangement) for your retirement benefit. Once there is money in an IRA, it's all the same, there is no difference (for taxes) between a "rollover IRA" from a workplace plan, and an IRA you built up over time.
Then, if you rollover the IRA into a new 401k, it becomes part of the new 401k, and loses any attachment to the former employer. This is true even if you do a direct rollover from old 401k to new 401k.
