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W401K asks:

<<I look forward to reading through section 72(t) at work toomorrow!!!!(not really, but I will do it.)
Thanks for the info and pointing out my error. However, I've never seen this utilized since almost all 401k Plans only allow for a lump sum distribution. Can this rule be utilized for IRAs?? If so, the advice given to the questioner shoul be to roll the money into an IRA.>>

Section 72(t) withdrawals are applicable to both employer-provided qualified retirement plans (whether defined contribution like a 401k or defined benefit) and to IRAs. And you are incorrect that almost all 401k plans allow for only lump sum payments. Most will allow for total cash or installments ranging from two to 15 years. Some even allow for a conversion to an annuity payout. Distributions depend on what the plan document says. Most folks will take the total cash via a transfer to an IRA. As to having the money transferred there, that's fine. But the 72(t) distribution can apply just as well to the 401k plan for a young (i.e., less than age 55) retiree.

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