You can generally withdraw from a 401(k) without penalty starting at age 59½. Withdrawals before this age usually incur a 10% early withdrawal penalty plus income taxes. However, there are some exceptions:
- The IRS "Rule of 55" allows you to withdraw penalty-free if you leave your job in or after the year you turn 55, but you must withdraw from the 401(k) of your most recent employer.
- Public safety employees can qualify for penalty-free withdrawals starting at age 50 under this rule.
- Other exceptions include disability, divorce settlements, IRS levies, military active duty, and certain hardship withdrawals.
In all cases, even if the 10% penalty is waived, withdrawals are still subject to income tax unless coming from a Roth 401(k) under specific conditions. Thus, the typical withdrawal age without penalty is 59½, but the Rule of 55 and other exceptions can allow earlier withdrawals without the 10% penalty though taxes still apply.
