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401K: Can I get money without penalties before I’m 59 1/2?

Many Americans have a 401K and sometimes want to dip into it before they hit the right age, but can that be done without penalty?

401K paperwork

It’s advised that you wait until the age of 59 1/2 to take from your 401K so you don’t end up paying taxes.

Those who do withdraw early end up paying 20% in taxes to the IRS.

In addition, there’s a 10% penalty given by the IRS.

There are rules about withdrawing money from you 401k

The reason is to try and discourage people from taking out of their retirement fund for reasons that are not retirement related.

Sometimes people find themselves in a pinch and need to reach into their 401K.

The Rule of 55 and your 401K

Those who are 55 and over with a 401K can withdraw early under the right circumstances.

This rule lets you skip early withdrawal fees if you leave your job at age 55 or older.

Certain positions like police officers, corrections officers, or firefighters could choose to do this at age 50.

Workers Compensation: Applying for the benefit in 2022

The 10% penalty is eliminated. The 20% tax fee is not eliminated.

This will only apply to current jobs and plans, not old jobs and plans.

You can’t leave a job at 54 and withdraw at 55. You must do it the year you’re 55 or older.

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