Hello: I will turn 55 in Dec 2017 and I plan on retiring May 2017. I want to take a lump sum disbursement from my 401K and Roth 401K to pay off an investment property.
I have 2 questions:
1. The tax code states that you sever employment in the year that you turn 55, you can take a lump sum disbursement from your 401K without paying the 10% penalty. In the scenario above, I assume that I won’t have pay the 10% penalty. Is this correct? Or do I have to wait until I turn 55 in December?
2. Will I have to pay tax or penalty on the Roth 401K if I take a disbursement in the year that I turn 55? With the Roth 401 K account, It is not clear as to whether I will have to pay tax and/or penalty on the earnings OR no tax or penalty.
