Age 55 is the first important milestone age for people consider early retirement.
At age 55, if you leave your employer, it's the first year you can take 401K distribution without the 10% tax penalty.
Recall, 401K savings are subject to Required Minimum Distribution (RMD) at age 70.5 and you have to pay income tax when you take the distribution.
If you take the early distribution at age 55, you will have to pay income tax at that time, but if you invest the money on your own, you might only have to pay long term capital gain tax.
Should you take 401K distribution at age 55 (if possible) and invest on your own, or leave the money at your old employer's 401K account and grow till age 70.5 and be forced to take RMD?
You can use the following 401K Age 55 distribution calculator to run by yourself.
Just enter your information into the areas highlighted in yellow color and see the after-tax balance comparison.
At age 55, if you leave your employer, it's the first year you can take 401K distribution without the 10% tax penalty.
Recall, 401K savings are subject to Required Minimum Distribution (RMD) at age 70.5 and you have to pay income tax when you take the distribution.
If you take the early distribution at age 55, you will have to pay income tax at that time, but if you invest the money on your own, you might only have to pay long term capital gain tax.
Should you take 401K distribution at age 55 (if possible) and invest on your own, or leave the money at your old employer's 401K account and grow till age 70.5 and be forced to take RMD?
You can use the following 401K Age 55 distribution calculator to run by yourself.
Just enter your information into the areas highlighted in yellow color and see the after-tax balance comparison.
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