Retirement Planning/401K Withdrawl due to Layoff


I turn 55 in August of this year (2013) and am concerned that due to the Sequester, I may be laid off before I turn 55. Will I be  able to withdrawal from my 401K without penalty if I'm laid off before my birthday?

Dear Dan,

In order to avoid the Premature Distribution Penalty when taking a distribution from a 401(k), you must be at least 55. However, if you roll the entire account into a pour-over IRA, you could initiate 72(t) distributions from the IRA at any age. As long as you maintain the 72(t) distributions through age 59 1/2 and for at least five years (both qualifiers are necessary), you will eliminate the PDP.

Also, there are other distributions that qualify for waiver of the PDP, when drawn from an IRA. Not knowing your situation, I do not know whether these would be suitable, should you exercise the 72(t).

Willard R. Brumbaugh, LUTCF
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(888) 792-2379

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Willard R. Brumbaugh, LUTCF


I have answered many questions regarding 401ks, IRAs and annuities as well as life insurance. I have been counselling against most Qualified Plans since 1994.


Ranked in the top 5 in retirement catagories at most of its last 2 1/2 years. Organizations I belong to: National Association of Insurance and Financial Advisors-California
Inland Empire Estate Planning Council

Life Underwriters Training Council Fellow

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