Question for the Money Doctors
Question submitted on May 13, 2010.
QuestionI am leaving my current job that I have had for 20 years and moving. Daughter starting college. Will be employed (hopefully) within 3 mths after relocating. I will be 55 this Dec. I need to cash out part of my retirement acct, will I have to pay 10% penalty (since i'm turning 55 this year) or just tax for distribution?
In order to be considered an exception to the penalty, the distribution must come from a qualified plan, not from an IRA, after you separate from service, and in or after the year you reach age 55. Since you will be 55 in December of this year, you meet the age requirement. To avoid the penalty, take the distribution AFTER you terminate your employment DIRECTLY from the plan.
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