55 Rule 401 (K)
On a 55 rule 401(k) and the client has half Roth 401(k), half traditional 401(k), can the client use the 55 rule just to take it from the Roth portion and still get the money out tax free with no penalty. Thank you.
On a 55 rule 401(k) and the client has half Roth 401(k), half traditional 401(k), can the client use the 55 rule just to take it from the Roth portion and still get the money out tax free with no penalty. Thank you.
Permalink Submitted by Alan - IRA critic on Thu, 2023-07-13 18:05
The penalty exception applies to any distributions from the 401k, but the plan may not allow partial distributions after separation. In that case, client could request a distribution from the Roth portion for which the portion allocated to gains would be taxable, but no penalty. The rest of the plan would have to be directly rolled to an IRA or a current employer plan that accepts rollovers.