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CORRECTION: The Philadelphia Inquirer Personal Finance Column.
Byline: Jeff Brown
Dec. 11--The story slugged PH-FINANCE-COL, filed for Dec. 11 by KRT Business News, omitted the 1/2 fraction from the age 59 1/2 throughout the story.
The complete, corrected story follows.
Dec. 11--QUESTION: My employer is cutting back and offering buyouts. I'd like to take one, but at age 55 I might struggle a bit until I can tap my 401(k) at 59 1/2. I suppose the buyout money would offset any penalty I'd face from early withdrawals, though. Any suggestions?
ANSWER: First the good news. You could tap your 401(k) right away, without triggering the 10 percent penalty that applies to "unqualified distributions."
But that may not be a good idea.
Generally, one has to be at least 59 1/2 to make penalty-free withdrawals from a tax-deferred retirement account such as a 401(k) or IRA. But there are a number of exceptions. One allows early withdrawals by people who have left their jobs, as long as they turn 55 or already are 55 in the year they quit or are let go. In fact, you can continue making these withdrawals without penalty even if you get another job.
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