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Little Known Rule of 55 Can Help Fund Early Retirement
With Social Security still seven years away at the very least, how can people aged 55-60 retire early using their retirement funds if they cannot even access them penalty free until 59½? Enter the Rule of 55. This Kiplinger.com piece explains that if you leave your job at 55 and keep your funds in your employer’s 401k, you can start withdrawing from that account without penalty. But if you roll those funds into an IRA, you’ll have to wait until age 59½ to access them without a penalty. While the rule helps you avoid the penalty, it doesn’t exempt you from taxes. Any distributions you take will be taxed as ordinary income. Full piece here.