Re-employement after early seperation
I was laid off from my employer of 29+ years 596 days short of being able to leverage the “year you turn 55” exception from being able to access my 401K penalty free. If I were to return to that employer and leave again, prior to taking any distributions, would that in effect reset my last date of employment to avoid the 10% early withdrawal penalty? If so, how long would I have to be employed? A day? 90 days? Would I have to participate in the 401K again during this re-employment?
Permalink Submitted by Alan - IRA critic on Sat, 2016-07-23 17:56
If you are rehired and reach the age 55 year before separating again, the penalty would not apply. There is no time limit you are required to work before leaving again. You could also get another job, roll the prior 401k into the plan at the new job and leave at 55 and receive the penalty waiver for the full balance. Same with an IRA rollover into an accepting plan to get the waiver on the former IRA money.