Most personal pensions set an age when you can start taking money from them. It’s not normally before 55. Contact your pension provider if you’re not sure when you can take your pension. You can take up to 25% of the money built up in your pension as a tax-free lump sum.

Can I withdraw from my 401K at 55 without penalty?

If you are between ages 55 and 59 1/2 and get laid off, fired, or quit your job, the IRS Rule of 55 lets you pull money out of your 401(k) or 403(b) plan without penalty. 2 This applies to workers who leave their jobs anytime during or after the year of their 55th birthdays.

Is there an age 55 exception for IRA distributions?

Answer: No. The age 55 exception is only available for distributions from company plans, such as 401 (k)s and 403 (b)s. It DOES NOT apply to distributions from IRAs or IRA based plans, like SEP and SIMPLE IRAs.

Is there a downside to the age 55 rule?

Often, the best option to deal with this downside to the Age 55 rule is to come up with some other source of income during the intervening years. A part-time job could be the answer, helping Steve through the couple of years before he reaches age 59½.

Is the age 55 rule the same as the 72t rule?

These are two different rules completely. The Age 55 Rule allows you to take any amount at any time with no penalty if you’ve left employment on or after the year that you’ll reach age 55. The classic 72t rule requires you to take a specific amount each year for the longer of 1) five years or 2) when you reach age 59 1/2.

Is there a penalty for taking a 401k distribution at age 55?

Understand the IRS Rule for Taking 401(k) Distributions Starting at Age 55. If you have a 401(k) plan, you probably already know that there is usually a 10% penalty for withdrawing any of the funds before you reach age 59 1/2. But there are some exceptions to this early distribution rule, and one of them affects pre-retirees in particular.