I want to withdraw from my 401K without paying the 10% penalty although I am not 59 yet.  I read in the IRS guidelines that you are subjected to the 10% penalty if you withdraw before 59 unless you meet some of their circumstances.  One of them was: If you are separated from your job through permanent layoff, termination, quitting, or taking an early retirement in the year you turn 55, or later, then you do not have to pay the 10% penalty. Well I retired March 2015, and I'm 56 this year and I want to withdraw $2800 from my 401K without that penalty.  Based on that stipulation, it sounds like I would be exempt from having to pay the 10% penalty.  Yes, I am aware that it still will be taxed of course, but I just want to make sure that I am not going to be subjected to pay that 10% penalty.  Can anyone tell me whether this is correct or not?


It sounds,like you should be ok. The magic number being 55 (or 50 if you're a qualified,public safety employee) for early retirement. But I would definitely consult with a tax advisor before proceeding.

Dear Curve56,

I encourage you to contact our team of Financial Advisors here at USAA who can give you advice based on your specific situation and needs. They can be reached at 800-771-9960. Thank you for posting and congratulations on your retirement!