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Level 2

Question

401K withdrawal

Forum|Forum|5 years ago
May 10, 2021
1 reply
19 views

Hello,

Question: I retired from my previous employer and I left my 401K with them which is currently held at Prudential Retirement and I am 55 yrs old. I withdrew some funds from my 401K and I was told by one of the Prudential rep that because I retired from my employer and that I am 55 yrs old that the 10% tax penalty does not apply? Is that accurate? Thank you.

Level 15

The age at which early penalties for retirement plan distributions end is 59 1/2, not 55. You would have to have a special circumstance to avoid the early withdrawal penalty.

One way to avoid the penalty would be to make substantially equal payments over a period of 5 years, ending no later than when you turn 591/2.

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Level 2

Yes, I am aware and the Prudential Rep is aware of the 59 1/2 rule but since I retired from my Employer, he said there's no 10% tax penalty. Hmm....

Level 15

He may be assuming you will make equal withdrawals as is typical for a pension plan, in which case you would not be subject to the penalty.

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