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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.

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)?
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