Early Retirement Withdrawals

September 16, 2008
Michael Sheehan

Physician's Money Digest, July15 2003, Volume 10, Issue 13

So, you've decided your nest eggis large enough and you're ready tohead for the retirement hills a bitearly. Be sure you're aware of thepenalties for early withdrawal ofretirement funds. If you start withdrawingthe money before age591/2, the general rule is that youpay a 10% penalty on the amountyou withdraw, in addition to anyincome tax you owe on the withdrawal.There are several exceptionsto the rule, though, including1 that applies only to 401(k) plans.If you leave your employer duringor after the calendar year in whichyou turn age 55, you can start takingdistributions from your 401(k)plan without triggering the 10%penalty, although you will still oweordinary income taxes on themoney.