Physical Address
304 North Cardinal St.
Dorchester Center, MA 02124
Physical Address
304 North Cardinal St.
Dorchester Center, MA 02124
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The Rule of 55 is an IRS provision that allows certain workers to access their 401(k) savings without incurring a penalty after age 55. To utilize this rule, you must leave or lose your job during the year you turn 55 or later, and it only applies to your most recent workplace’s plan.
Before considering the Rule of 55 for early retirement, it’s crucial to weigh its advantages and disadvantages.
To use the Rule of 55 for early retirement, follow these steps:
You must leave your job the year you turn 55 or later to qualify for penalty-free withdrawals.
The rule applies only to the 401(k), 403(a), or 403(b) plan from your most recent job. Consider rolling over funds from previous plans into your current one, but consult with a tax advisor first.
Consulting a financial advisor can help you weigh your options and strategize your withdrawals to minimize tax obligations and ensure your savings last.
Besides the Rule of 55, the IRS allows penalty-free early withdrawals for financial hardships, such as medical expenses, foreclosure risk, burial expenses, permanent disability, or natural disasters.
If you’re 55 or older, you may qualify for penalty-free distributions from your 401(k), 403(a), or 403(b) using the Rule of 55. However, it might be beneficial to let your savings grow longer. For personalized retirement planning and advice on 401(k) distributions, contact a financial advisor.
For any mortgage-related needs, call O1ne Mortgage at 213-732-3074. We’re here to help you navigate your financial future with confidence.
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