Quote:
Originally Posted by selhars
I know the question was about an IRA....but...IF a person has a 401K, and:
....employment was terminated during or after the year you turned 55, you will qualify for penalty-free early withdrawals from that 401(k).
Workers 55 and older can access 401(k) funds without penalty if they are laid off, fired, or quit.
This penalty free option for early withdrawal is not true if you rolled over that money into an IRA. But there could be the possibility of hardship withdrawal -- I think.
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The attached link is a pretty good article regarding early withdrawals from 401K's.
https://www.nerdwallet.com/article/taxes/401k-taxes
Basically it says that the IRS usually requires the 401K plan to withhold taxes of 20%. So, if you withdraw $10,000 you get $8000 and they send $2000 to the IRS. If you are required to pay a penalty of 10% you may have to pay an additional $1000 when you file your tax return. Then they go on to list many exceptions to this general rule.
If the early withdrawal is from an IRA there may be a different set of rules. Try googling the question if it is an IRA. Based upon the explanations given by
www.nerdwallet.com they seem to explain the basics very clearly to the reader.
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