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New Member
posted Jun 1, 2019 12:49:50 PM

My wife’s employment was terminated in November of 2018, she turns 55 in June 2019. Does the rule 55 apply if she removes her $$ from the 401 k

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1 Best answer
Level 4
Jun 1, 2019 12:49:54 PM

If you're referring to the 10% penalty exception for separation of service at age 55, the answer is unfortunately, no.  See page 20 of this IRS publication.  Under the penalty exceptions it states:

"Made to an employee after separation from service if the separation occurred during or after the calendar year in which the employee reached age 55." 

https://www.irs.gov/pub/irs-pdf/p560.pdf

5 Replies
Level 15
Jun 1, 2019 12:49:51 PM

So she was age 54 when she separated from service?

New Member
Jun 1, 2019 12:49:52 PM

Yes

Level 4
Jun 1, 2019 12:49:54 PM

If you're referring to the 10% penalty exception for separation of service at age 55, the answer is unfortunately, no.  See page 20 of this IRS publication.  Under the penalty exceptions it states:

"Made to an employee after separation from service if the separation occurred during or after the calendar year in which the employee reached age 55." 

https://www.irs.gov/pub/irs-pdf/p560.pdf

Level 15
Jun 1, 2019 12:49:56 PM

Was she a Public Safety employee?  

New Member
Jun 1, 2019 12:49:59 PM

No private company.