Right now I am looking into this issue - and it appears that theinterpretation is to allow access to 401K funds with no tax penaltyif you are over 55 and are "separated" from the employer.If a plan is interpreting the law to allow penalty-free non-72(t)/SEPP withdrawals when the employee "separated" from service prior to the year that the employee turned 55, the plan would be in violation of the law.The fact that the plan may allow someone to be in violation of the law probably won't hold much sway with the IRS - they will tend to punish both the plan and the former employee.I am not clear yet on whetherthe funds have to be taken over a five year period (i.e. if you startat 55 you have to continue to 60 and cannot roll over the 401Kfunds until you pass 60).Taking prescribed withdrawals over a minimum 5 year period, or until 59 1/2 - whichever is later - is taking 72(t)/SEPP withdrawals - not using the penalty-free exception for separating from service in or after the year one turns 55.AJ
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