Message Font: Serif | Sans-Serif
 
No. of Recommendations: 0
I copied this from a previous post:
If you separate from service (retire, quit, whatever) with your employer any time in the year in which you turn 55, you can take withdrawals from your 401(k) without the 10% penalty. It doesn't matter if you go to work for someone else, you just have to leave that particular employer. It also doesn't matter if it's an annuity or lump sum distribution.

My original question was:
What happens if you return to work for the employer that you retired from. Can you continue to make penalty free withdrawals from your 401 (k)?

W401K wrote:
The information you posted regarding the age 55 rule had one error in it. The distribution can not be taken as an annuity payment and still be exempt from the 10% tax. The Age 55 exception to the 10% penalty is a one time event only. Therefore, if the payments were to be taken periodically, then only the first distribution would be exempt from the 10% penalty. The only other solution would then be to have the payments taken out according to the Code 72(t) distribution requirements of equal and periodic payments based on your life expectancy. Most 401ks do not allow for annuity payouts because of the administrative work involved. Should you want annuity payouts, do a rollover to an IRA and take the annutiy type payouts from there.
Should you return to your previous employer, the distribution you received at age 55 would not become taxable.

My confusion is:
From previous posts I have read I understood that if you left your employer after 55 that you could withdraw money from your 401K anytime you wanted to and as often as you wanted to as long as it was okay with the plan administrator without paying a 10% penalty. What is correct?

ThankYou


Print the post  

Announcements

What was Your Dumbest Investment?
Share it with us -- and learn from others' stories of flubs.
When Life Gives You Lemons
We all have had hardships and made poor decisions. The important thing is how we respond and grow. Read the story of a Fool who started from nothing, and looks to gain everything.
Contact Us
Contact Customer Service and other Fool departments here.
Work for Fools?
Winner of the Washingtonian great places to work, and Glassdoor #1 Company to Work For 2015! Have access to all of TMF's online and email products for FREE, and be paid for your contributions to TMF! Click the link and start your Fool career.