The Rules for Making Penalty-Free Withdrawals From Your Retirement Accounts
If you withdraw from your 401(k) too early, you may be hit with a 10% penalty unless you left your job after a certain age.
I have a 401(k) and a 457 plan from jobs I left many years ago. How old do I need to be to withdraw the money without a penalty?
You generally must wait until age 59½ to withdraw money from a 401(k) or 403(b) employer-sponsored retirement plan without a 10% early-withdrawal penalty, but there is an exception: You can take penalty-free withdrawals before then if you were age 55 or older when you left your job.
And 457 plans, which are generally available to public-sector workers, have an especially generous rule: You can tap the money without the 10% early-withdrawal penalty anytime after you leave your job, regardless of your age.
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Keep these rules in mind if you’re thinking about rolling the money over into an IRA. You can roll money from a 401(k), 403(b) or 457 plan into an IRA after you leave your job, and there are benefits to IRA rollovers: You’ll have more investing choices; you can choose the administrator; and you may be able to simplify your finances by consolidating several old plans into one account. But when the money is in a traditional IRA, you’ll have to pay a 10% penalty if you take the money before age 59½.
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