Things to know about the 55t rule and your 401k

If you want to retire early and are thinking about using the little known 55t rule then you may want to keep a few things in mind. Many people ask us about retiring early with this rule but sometimes they get the rules confused.

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[MartyMeyerdierks]

Best explaination of "rule of 55" I've seen.

[kevn]

Excellent content. I just discovered the 55t rule last week and while I won’t be retiring next year when I turn 55 I think 57.5 will work.

[olliehopnoodle]

Good video with accurate information. I was very excited to learn about the 55t rule a few years ago and may make good use of it.

[teams]

I used this IRS Rule of 55. I got a good retirement package at 56. So many financial planners never mention this Rule to their client. It worked well for me.

[dougm]

great information. i asked our company about the 55 rule and if we had it. they said it's an IRS rule so ya every company has it. i'm not to happy here, turning 55 in 3 weeks, good to know now i can leave any time i want now. was hoping to get 7 more years in. we'll see.

[davidandrews]

This information is a potential game changer for me. Thanks so much for making this video :)

[tommajor]

I did this!  56 turning 57 this year.  Retire on April 26th.  Moved the bulk of my 401(K) money over to a Rollover IRA.  Left enough in my 401(K) to cover monthly withdrawals until I'm 59.5.  And it just so happens that my first withdrawal will happen today probably after the market closes and the funds are calculated which, if the market gains hold, will be good for me given that they have been down for several days in a row.  Get a nice boost at the close and then they withdrawal the disbursement.

[bigtoeknee]

When using the rule of 55 can i withdraw any amount any time i need or does it beed to be a fuxed periodic payments like 72T rule?

[David-qrpi]

Do you have to ensure your company’s plan supports this?

[everydayadventure]

Make sure your 401k plan allows the withdrawals after you separate. Some employers provide limited options for what you can do with the 401k. As an example, some only allow you to leave the money in the plan until you take the full distribution, which can be rolled over into your IRA, but you can’t use the 55 rule in the IRA. (72t would still be an option)

[bruceblair]

Great stuff, wish I saw this when I retired the year I turned 55. Would like to see you also cover the 72t exception for a SEPP which I ended up doing a few years back.

[fordmodela]

So 401k withdrawal can be once or more using this rule? But IRA.’s must be 5years of equal distribution?
This is the question I’m still trying to process since when I asked this question to my work hired adviser he said it must be a 5 year plan of equal distributions. Regards

[Broke_Expat]

Amazing how this isn't widely known. I've brought it up multiple times to have someone want to argue and insist it's in concrete - 59.5.... Wanting / planning to take advantage of it myself... Thanks for the vid

[DaveMatthews]

Great video! Can the rule of 55 work if I have a Solo 401K that is Traditional?

[Foodthought]

How do you know if your job is a government job or corporate?

[Steve-wr]

Does the rule of 55 apply to a Roth 401(k)? I haven't been able to find a straight answer anywhere and none of the videos I've seen anywhere addresses it.

[TB-vbst]

I have both a 401K and an IRA. If I were to try and retire at 55, wonder what is the better option, roll over the 401K into an IRA and do the 72t, or vice versa and do the rule of 55. I've read that IRA gives you more investment options than a 401K so not sure. Reason I want to combine it into one is because to me, it would seem better to have one lump sum that you can withdraw from.

[JustABill]

Can you discuss how 55T interacts with Roth 401k. My understanding is that Roth 401k money will get taxed again if withdrawn from a Roth 401k even if its from your current employer that you leave after age 55. I also heard that you could take out Roth contributions (but not earnings) tax free at any time, but am not sure if that's only Roth IRA or both Roth IRA and 401k.

[damis]

I just turned 55 years old. If I quit my job, I have access to my 401k without penalties. What happens if I start working for the same company 6 months later? Do I still have access to the 401K without penalties?

[ShaneHummus]

This is the lucky comment. If you upvote this, your portfolio will grow until the end of the year.