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New Member

401K loan

Hi, I took out a loan on my 401k in February of 2019, my employer terminated my position then rehired me 4 days later at a new lower paying position to which It was either make the 401k payment or my house payment so I defaulted on the 401k loan.  I also turned 55 in september of 2019. I've received my 1099R for this. Do I still fall under the 55 rule?

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Expert Alumni

401K loan

Yes. 

 

The IRS Rule of 55 allows an employee who is laid off, fired, or who quits a job between the ages of 55 and 59 1/2 to pull money out of his 401(k) or 403(b) plan without penalty. This applies to workers who leave their jobs anytime during or after the year of their 55th birthdays.

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