If I Retire Or I am Laid off before 59.5, Can I Withdraw the Funds Accumulated in a 401(k) Plan Without Paying a 10 Percent Penalty? - E-PersonalFinance

If I Retire Or I am Laid off before 59.5, Can I Withdraw the Funds Accumulated in a 401(k) Plan Without Paying a 10 Percent Penalty?

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In most cases, no. The IRS allows penalty-free withdrawals in five cases: If you become totally

In most cases, no. The IRS allows penalty-free withdrawals in five cases: If you become totally and permanently disabled; have medical debts exceeding 7.5 percent of your adjusted gross income; are ordered by a court to give the money to your divorced spouse, a child, or a dependent; get permanently laid off, terminated, quit, or retire in the year you turn 55 or later; get permanently laid off, terminated, quit, or retire and set up a schedule to withdraw money in substantially equal amounts over the life expectancy. In these limited cases, you will still owe income tax on your withdrawal but not a 10 percent penalty.

 
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