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Most of the time, when taking a distribution from a 401(k) or other Qualified Retirement Plan (QRP) prior to age 59\u00bd, there generally is a 10% penalty that applies. That is, unless one of the exceptions<\/a> applies.<\/p>\n If you happen to be over age 55 (technically, if you\u2019re in the calendar year you\u2019ll reach age 55) when you leave employment, there is another exception that applies. Any distribution that you take from the QRP, as long as you were at least 55 years of age when you left employment, will not be subjected to the 10% penalty. Only ordinary income tax will apply to the withdrawal.<\/p>\n This provision only applies to QRPs, such as a 401(k) or 403(b), and not to IRAs. So if you\u2019re leaving employment at or after age 55 but before reaching 59\u00bd, it can be in your best interest to not<\/span> rollover your QRP to an IRA, at least until after you reach 59\u00bd. Even if you don\u2019t need the money right away, it could be beneficial to have the source of funds available penalty-free.<\/p>\n For retiring police, firefighters and medics, the age for this exception is 50 \u2013 so these folks can take distributions from their QRPs after age 50 if they\u2019ve left employment without penalty.<\/p>\nShare, tweet, print, email, like or pin this post:<\/h3>\n<\/div>\n<\/div>\n
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