You can start withdrawing from your 401(k) without penalty at age 59½. Before this age, withdrawals generally incur a 10% penalty on top of regular income tax, unless you qualify for certain exceptions. One notable exception is the "Rule of 55," which allows you to withdraw penalty-free from your 401(k) if you leave your employer during or after the year you turn 55, but this applies only to the 401(k) plan of the employer you just left, not to previous plans or IRAs. Also, if you are still working at the company you contributed the 401(k) to, your plan may restrict withdrawals even after age 59½. Required Minimum Distributions (RMDs) must start at age 73 (for those born in 1951 or later), with some slight variations based on birth year. In summary:
- Age 59½: Earliest age for penalty-free withdrawals (subject to plan rules).
- Age 55 and older: Possible penalty-free withdrawals if you have left the employer during or after the year you turned 55 (Rule of 55).
- Age 73: Required minimum distributions must begin if you are no longer employed.
Always check your specific plan for any particular restrictions or provisions. This information is based on current regulations and common 401(k) plan rules.
