rick++ wrote:
- quote -

But let's be clear. The word 'annuitize' does not have to mean 'buy an
annuity' here. 72(t) lets you take a series of "substantially equal
periodic payments" (SEPP) from your IRA without penalty, you must
withdraw money at least once a year, and you must keep taking
withdrawals for five years or until you reach age 59½, whichever is longer.

part of above reply lifted from
http://www.retireearlyhomepage.com/wdraw59.html

From the above, someone 54½ or older has to do this for 5 years, and
then they can withdraw as they wish.
JOE

- quote -

You can annuitize at any age and not pay 10% penalty.
That means five years of withdrawals prorated a minimum
for life expectency.

In most tax-advantaged accounts you see some sort of five
year restriction. I presume thats to prevent these as use
as speculative tax shelters, and encourage long term investing.

Reed wrote:

- quote -

That's when you review the 72(t) and see if that's the way you choose to
go. Worse case on 72(t) is you don't need the money (in year 2-5), you
pay the tax, and invest what you don't use in a post tax acccount. It
just takes some thought to run the numbers.
JOE

On Mar 29, 4:00 am, Reed <r...[at]rmi.net> wrote:
- quote -

Once you roll a 401(k) to an IRA, age 59.5 applies for unrestricted,
penalty-free distributions.

Dave

snip

- quote -

snip

Or you are laid off/RIFed 3 months before the year turning 55 !!

I'm curious, does this rule apply only to the current 401K plan at the
time of age 55+ ?? What about a previous employer 401K that was rolled
over to IRA ??

--reed

On Mar 28, 11:06 am, joetaxpayer <joetaxpa...[at]nospam.com> wrote:
- quote -

More precisely, you can take unrestricted 401(k) distributions without
penalty during or after the year in which you attain the age of 55
years. If your 55th birthday is in December, you can terminate
employment and take distributions anytime during the year. One caveat
is your particular 401(k) plan rules -- they may not permit partial
distributions, in which case you might have to take and pay income tax
on more than you want.

Dave

Elle wrote:

- quote -

"no" is right. Specifically, "Distributions received if you separate
from service with your employer after you have attained age 55." are not
subject to 10% penalty. As Zoe stated in the original smart money quote
she meets this requirement.

The 'got ya' for some is this; You misunderstand, and retire at 54. You
may not take withdrawals until 59-1/2 under these rules. You then go to
rule 72(t) and use that process.

And we wonder why so many folk are so confused. The rules are endless.

JOE
JoeTaxpayer.com

On Mar 28, 9:11 am, "Elle" <honda.lion...[at]nospam.earthlink.net> wrote:
- quote -

Oh sorry. Ignore above then.

"kastnna" <kastnna[at]auburnalum.org> wrote
- quote -

No. Rule 72(t) is different from the rule to which the OP is
referring.

The OP should google using the words {401(k) withdrawals
"age 55"}, for one thing, but it sounds like she's on the
right track: Per law, she should not have to pay any
penalty, instead paying only income tax on 401(k)
withdrawals, assuming she meets the criteria for doing so.

Zoe, the exception I believe you are replying to is referred to as the
72(t) regulations. Regulation 72(t) allows for "substantially equal
periodic payments" before age 59 1/2 that do not incur the 10% applied
to premature distributions.

The guidelines for calculating 72(t) payments are based on mortality
tables, the interest rate, and one of three methods to calculate the
allowable distribution. Life expectancy, annuitization, or
amortization are the three methods allowed for calculating
distributions.

Here's the important part, you MUST continue to make these
substantially equal and periodic payments for the longer of 5 years or
until you reach age 59 1/2. If you fail to make a distribution you
will be subject to the 10% penalty. Also you essentially "lock-up"
your money. In an emergency, you cannot take a lump sum distribution
without incurring the 10% penalty on ALL of the other money you
prematurely distributed as well as the lump sum. Furthermore, once
calculated and implimented you can only change the distribution amount
once. All distributions are be taxed as ordinary income.

The rules for 72(t) are many and the IRS seems to be constantly
modifying them. I would consult with a professional (or a VERY skilled
401(k) plan administrator) before going forward.

Good luck.

On Mar 28, 7:19 am, "Zoe" <z...[at]mailinator.com> wrote:
- quote -

Yes.

Dave

read this rule on smartmoney:

Age 55: If you permanently leave your job for any reason, you can receive
distributions from your former employer's qualified retirement plan(s) without being
socked with the 10% premature withdrawal penalty tax. This is an exception to the
general rule that distributions received before age 59 1/2 are hit with a 10% penalty.

does this mean the 401k distributions I would take, at age 55 are subject to only
normal income tax ?