☰
✕
Sign In

Why sign in to the Community?

  • Submit a question
  • Check your notifications
Sign in to the Community or Sign in to TurboTax and start working on your taxes
Level 2
posted Apr 10, 2024 6:19:19 AM

Rule 55

Hello,

I was laid off from my job in 2020 when I was 54. I have not contributed to my previous employer's 401k since. Would rule 55 apply to me if I took a distribution in 2023 after being laid off a second time from a different employer?

Thanks,

0 4 1386
4 Replies
Expert Alumni
Apr 10, 2024 7:00:41 AM

Yes, the "Rule of 55" as an exception to the 10% early withdrawal penalty would apply to any distribution that happened after you reached age 55 from a qualified plan with a former employer.  Here is an IRS topic with more information.   The distribution is taxable income.  

Level 15
Apr 10, 2024 7:49:16 AM

Being laid off by a different employer does not qualify you to use the age-55 exception for distributions from the 401(k) at the first employer.

Level 2
Apr 10, 2024 7:58:25 AM

Thanks for the reply dmertz.

Level 2
Apr 10, 2024 7:59:20 AM

Thanks for the reply DMarkM1