How To Take Early 401k Withdrawal Without Penalty

How To Take Early 401k Withdrawal Without Penalty  In this podcast, I want to talk about the Rule of 55 for 401k's and why if you are thinking about retiring early you should NOT rollover your 401k.    The Rule of 55 is an IRS guideline that allow individuals in retirement to pull out retirement income from their old 401k without paying the 10% penalty for early withdrawals. This rule applies to 401k's and 403b's. The rule applies whether you are let go from work or you decide to retire.  Why does the 401k rule of 55 matter? Because in today's world of FIRE movements and individuals wanting to retire at 55, the 401k rule of 55 gives retirees a way to get retirement income without paying a 10% penalty from qualified retirement assets.    Remember, you are not allowed to take retirement income from retirement accounts like IRA's, Roth IRA's, SEP-IRA's, or other tax advantaged accounts until you are 59.5 without incurring a 10% penalty. There are a few exceptions to this penalty for IRA or Roth IRA owners, but those exceptions mean you have a terminal illnesses or chronic illness.    In order for the 401k Rule of 55 to comply you must follow two important rules:    1. You must leave your job the year you turn 55 or later This means that if you retire at the age of 55-59.5, you can apply the 401k rule of 55 to your current 401k and take out retirement income without penalty. If you retire at 52 and then take retirement income out of your current 401k at 55, you will be penalized the 10% by the IRS.   2. You can only withdrawal Retirement Income from your current 401k This means you can't apply this rule to an old 401k that you had at a previous job. It must be your CURRENT 401k. A quick tip here, if you have old 401k's and you want to retire early, roll the old 401k's into your current 401k BEFORE retiring.    I hope you find this podcast helpful in your Retirement Journey. Thank you for listening! **Free Retirement Download: The Roadmap to Retirement:** https://yourfinancialekg.com/#download **To schedule your virtual retirement and investment consultation with Drew,  please select a day & time that works best for you: https://calendly.com/pearlwealthgroup/discoverycall ** Pearl Wealth Group  Drew Blackston, CRC® & RFC®  Office: 813-807-5060  [email protected]  https://pearlwealthgroup.com/