Info on 401(k) Withdrawals at Age 55closeicon pension age 55

Can You Take a 401(k) Withdrawal at 55? Age 55 Access Is Possible, and Even at Age 50 for Some Workers Pin Share Flip Email Hero Images/Getty Images Retirement Decisions Before Retirement 401(k) Retirement Age Plan for Retirement Social Security IRAs Pensions Investing Budgeting & Savings Tax Tips After Retirement Careers Annuities Real Estate Insurance Find an Advisor View All By Dana Anspach Updated August 12, 2016

Y yqyhwuwn. mont blanc laptop bags online indiaou just turned 55 and you want to withdraw money from your 401(k) plan. Are you allowed to? Maybe.

It depends on whether you are still working for the company where your 401(k) plan is at; if you’re no longer working for that company, then it depends on how old you were when you left employment there. I cover these various circumstances below.

Still working for the company

Most 401(k) plans do not allow "regular withdrawals" at age 55 while you are still working for the company.

By regular withdrawal I mean a withdrawal that is not subject to penalties, and does not require you to qualify based on special circumstances.

Instead of a regular withdrawal you may be able to take a 401(k) loan , or qualify for a hardship withdrawal  - if your 401(k) plan allows these options. Not all 401(k) plans are required to offer loans or hardship withdrawals.

You can also check with your plan administrator to see if they have a special provision that allows for something called an in-service distribution. 

No longer working for the company

If you want to take money out of an old 401(k) plan – meaning a plan from an employer whom you no longer work for – the rules are a little different.

If you left your previous employer during or after the year you reached the age of 55, then you can take a withdrawal from the 401(k) plan. This withdrawal will be considered taxable income, but it will not be subject to the early withdrawal penalty tax.

This applies even if you are not yet age 59 ½. This applies only if you have left your money inside the 401(k) plan. For qualified public safety employees this provision applies at age 50, rather than 55. See IRS Retirement Topics on Early Distributions , and scroll down to the Separation form Service section and footnotes at the bottom for verification.

If you rolled your old 401(k) plan to an IRA, this early-access provision does not apply. If you take a regular withdrawal from an IRA before age 59 ½ it is subject to income taxes plus an early withdrawal penalty tax.

What If you left your previous employer before age 55?

If you left your previous employer prior to the year you reached age 55 (age 50 for public safety employees as defined by the IRS), but now you are over 55, sorry, the special age 55 withdrawal provision does not apply. Any withdrawals you take will be subject to the penalty tax, unless you can roll your 401(k) plan to an IRA and qualify for an exception to the penalty.

Planning opportunities

401(k) money is creditor protected. You will void this protection by cashing in a 401(k) plan early . If you are in financial trouble, cashing in a 401(k) plan early may be the worst thing to do.

If you are retiring early (before age 60 for example), in some cases it can make sense to leave money in a 401(k) plan until you reach age 59 ½. In this way you can take withdrawals if you need to.

If you could retire at age 54, it might make sense to wait until the year you reach age 55. This way you have more access to your 401(k) money and can take withdrawals that are not subject to an early withdrawal penalty tax.

Inherited 401(k)s

If you are a beneficiary and inherited a 401(k) plan the rules above do not apply. The rules that apply to you will depend on whether you were a spouse, or non-spouse, and the age at death of the 401(k) owner.

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authorised mont blanc retailers Pension commences before age 55 Also in this section PSS About PSS Contributions Benefits Deferred members Investments Advice Resources

If your invalidity pension commenced prior to your 55th birthday, you will be able to commute all or part of your pension to a lump sum at age 55. If you make no election to commute at age 55 you will have a second and final opportunity to commute at age 60. If you wish to make an election to commute all or part of your pension at age 55, you must lodge an election with STC no earlier than six months before your 55th birthday, and no later than six months after it. 

If you are eligible to make an election to commute all or part of your pension at 60, you must lodge an election with STC no earlier than six months before your 60th birthday, and no later than six months after it. If an election is processed after your 55th (or 60th) birthday, the lump sum is reduced by the amount of commuted pension paid to you since you turned 55 (or 60). 

Important note regarding commutation  

If you commute part of your pension to a lump sum, any spouse or de facto partner pension that may become payable in the event of your death will be based on the pension being paid at that time. If you commute all of your pension to a lump sum, a spouse pension will not be payable in the event of your death.

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At What Age Can You Start Drawing Retirement? Multiple retirement income sources may have different retirement ages.

happy family image by Yury Shirokov from Fotolia.com

More Articles Government Rules for Private Pension Plans & Retirement Age Can You Stop Paying Federal Income Taxes at Age 70? Normal Retirement Age & the IRS Income Tax Filing Requirements for Retired People Can the IRS Prevent You From Getting Social Security Retirement? IRA Account Withdrawal Regulations

Many people think you start drawing retirement income at age 65, but that’s not always the case. People approaching retirement age likely will have several different sources of retirement income lined up. Each of those retirement income arrangements may have a different retirement age for taking out the full benefit. The most common sources of retirement income are Social Security, 401(k) and IRA plans, and private pensions.

Social Security

The age at which you are entitled to claim your full Social Security retirement benefit varies according to your birth year. Persons born in 1937 or earlier could get their full benefit at age 65. For each birth year after 1937, the retirement age increased by two months -- up to a point. If you were born in 1942, for example, your retirement age became 65 years and 10 months.

Social Security Base Ages 66 and 67

Persons born in 1943 through 1954 have a full Social Security retirement age of 66. For each birth year after 1954, the retirement age rises by two months, so if you were born in 1959, your full retirement age is 66 and 10 months. You can collect a Social Security retirement benefit starting at age 62, but it will be 30 percent lower than if you waited until age 66. Persons born in 1960 and later must wait until age 67 to collect their full retirement benefit. If you wait until age 70 to collect, your monthly benefit will be 8 percent higher than at age 67.

401(k)s and IRAs

The federal regulations governing tax-advantaged retirement savings accounts such as 401(k)s, and individual retirement arrangements, called IRAs, define full retirement age as 59 ½. At that age you can start withdrawals from your 401(k) or IRA without penalty, although you must pay income taxes on the withdrawals. You must start drawing money from the accounts when you reach age 70 ½. You can withdraw money from these plans if you are younger than 59 ½, but you must pay a 10-percent penalty in addition to the income taxes on the amount you took out early.

Private Pensions

Private pension plans have their own rules for when you can receive full retirement benefits. Most private pension plans still consider 65 to be the retirement age. Some plans may offer the option to retire as early as age 55, but with a reduced benefit amount. Employers may elect to offer full retirement benefits at an earlier retirement age as an incentive for senior employees to voluntarily leave the company.

References (3) Social Security.gov: Retirement Planner, Full Retirement Age Saving to Invest.com: Retirement Ages and Eligibility Rules Nolo.com: Private Pensions Photo Credits happy family image by Yury Shirokov from Fotolia.com About the Author

Herb Kirchhoff has more than three decades of hands-on experience as an avid garden hobbyist and home handyman. Since retiring from the news business in 2008, Kirchhoff takes care of a 12-acre rural Michigan lakefront property and applies his experience to his vegetable and flower gardens and home repair and renovation projects.