Thinking of retiring before age 59 ½?
Investors may be familiar with the 10% tax penalty that comes with retirement account withdrawals before age 59 ½. However, I am finding that some are not familiar with the Rule of 55. This is where a person who retires, quits, or is fired from a job at age 55 may take withdrawals from their 401(k) without paying a 10% penalty. It is critical to note that this is 401(k) withdrawals only and if a person were to leave a job and rollover their 401(k) to an IRA Rollover account, withdrawals from that IRA account would be subject to the 10% penalty if taken before 59 ½. If you are coming up on age 50, 55, 59 ½, 60, there may be legislation that impacts your money at those ages. Talk to your financial advisor about catch-up provisions, tax penalties, reduced social security benefits for widows and widowers and other legislation that may impact your financial decisions.
This information is not intended to be a substitute for specific individualized tax advice. We suggest that you discuss your specific tax issues with a qualified tax advisor.
Seek professional advice before taking any action in regard to your finances.