Age 55 Rule & Roth 401k
Hi,
If a person retires from their current company at age 56 are they able to take a distribution and not incur the 10% penalty? Does it work the same way for Public Safety (age 50 rule)?
Thank you.
Hi,
If a person retires from their current company at age 56 are they able to take a distribution and not incur the 10% penalty? Does it work the same way for Public Safety (age 50 rule)?
Thank you.
Permalink Submitted by Alan - IRA critic on Fri, 2025-09-12 13:23
Yes, distributions from the sponsoring plan after separation in the age 55 year or later are penalty free. For a Roth 401k distribution that includes a pro rated amount of taxable gains, there would be no 10% penalty on the taxable gains. For PSOs the age is 50 or 25 years of service instead of age 55.
However, there are some plans that only provide for a total distribution after separation, and for these plans the taxes due on a large distribution may offset the penalty waiver.
Permalink Submitted by Peter T on Fri, 2025-09-12 14:24
Ok, thank you Alan. Very helpful.