Why does no one in our benefits know anything about our benefits since they closed the Operation Centers? Any time I call with a question they don't know. I want to retire at 55 and they can't tell me if I do if I can start withdrawals from 401 with no penalty. One person told me yes i can. Another said no, and that person should not have told me that and its up to the IRS. Wtf? Never seen such incompetence. They're only job is to know our benefits inside and out. What a joke.
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HR and the benefits administrator should know the Rule of 55 allows you to take withdrawals from your current employer’s 401k without the 10% early withdrawal penalty that usually applies to distributions before age 59-1/2. You still have to pay ordinary income tax on the withdrawals. The basic rules are:
- You leave your job — retire, quit, or are laid off — in the year you turn 55 or later.
- The money is in the qualified retirement plan of that employer, usually a 401(k), 403(b), or similar employer plan. You can’t take penalty-free withdrawals from former employers’ 401k plans before age 59-1/2.
- The distribution comes directly from that employer plan, not from an IRA.
Number 3 is important….If you convert the 401k to an IRA and take out money before age 59-1/2, you will have to pay the 10% penalty plus income taxes.