The IRS Rule of 55 allows an employee who is laid off, fired, or who quits a job between the ages of 55 and 59 1/2 to take money from their 401(k) or 403(b) plan without the 10% penalty for early withdrawal.

I've read that there is a10% penalty for early withdraw but I also read it as 10% tax? Anybody know exactly what happens with the 10%? Is it gone or is it just an extra tax amount that they take out - if so, it would just go towards taxes?

Also, I assume rule of 55 doesn't apply if keeping job but going part-time?


[Post edited by FfxStationHokie at 08/05/2021 11:16AM]