Distributions at age 59 1/2 with a new job.
I plan to retire and leave employment from my current employer. I plan on taking a penalty free distribution from my 401K to last me until I’m 59 1/2, and roll over the rest into an IRA. Once I reach 59 1/2, I will take distributions from my IRA. My question is, if I start working for another employer, will that affect my penalty free distribution in any way from my previous employer?
Permalink Submitted by Alan Spross on Fri, 2012-11-02 19:11
I assume you have reached age 55. You can take another job and still get penalty free distributions from the employer you separate from at 55 or later.
Therefore, you need to determine if the plan you separate from will allow flexible distributions or if they will require you to take a lump sum distribution. Distributions from the plan not directly rolled over will be subject to 20% mandatory withholding.