I was kicked in 2017 at 53 and think I might try for some other job and roll vz 401k in to it....since you are only able to get what is in the "retired" from 401k company holdings...that would be if I could get a real job with real benefits with real 401k ….so far not looking so great...
10 replies (most recent on top)
Every company's 401k plan is different and this is my interpretation of rule of 55 and how it relates to our non management 401k plan according to the Verizon Fidelity SPD and a chat with a Fidelity rep: If you retire in the year you turn 55 or older, even if you retire before your 55th birthday, the Verizon non management 401k plan allows you to take 1 and only 1 annual distribution out of your 401k plan a year without the 10% penalty until age 59 1/2. They don't care what you do with it, you can hide it in your mattress. I am not saying it is a good idea but that is a fact. This does not negate the rule of 55. The only time that would happen is if you rolled your 401k entirely into an IRA. You then would not be able to pull any out of that IRA without penalty until age 59 1/2 unless you did a 72T plan. There is so much misinformation on these boards that I would hope that everyone would verify anything they read here with a trusted financial adviser.
TO:11G59kQh-1pmv, True "72T" is an option if the employee is the off payroll any year before the year the employee turns 55. The 72T is far more restrictive in how funds are distributed without penalty. There is a set payment based on life expectancy, interest rates(30 year treasury). The distribution amount can be changed one time I believe and payments must be made until age 59 1/2, or at least five years. 72T is too restrictive for my current financial needs. I'd rather wait until the year I turn 55 to implement the "rule of 55".
72T is a option
TO 11G59kQh-leg**you're right, you're no financial advisor. An off payroll employee utilizing the "rule of 55' cannot move their 401k out of that company's plan until age 59 1/2. If said 401k is transferred out of the company sponsored 401k, the "rule of 55" will be lost and cannot be regained. My plan would be to transfer pension lump-sum into a qualified IRA to avoid penalty. keep my 401k with my Sponsored company's plan and earn/withdraw funds from both, penalty free until age-59-1/2 when I will have even more freedom to move my funds.
So, if you take a lump sum pension and roll it over into your 401k at age 55 you can touch that too?? Under this rule - retiring at 55???
If, of course, the #s work
I'm no financial advisor, but I would think that one way to skin that cat would be to calculate your yearly expenses, figure out roughly how much you will need yearly to get you to 59.5 plus a little extra in case of anything unexpected. Take that and put it in something that will earn the most possible and live off of it until 59 1/5. Move the rest of your 401k and your lump sum into an IRA or whatever to earn the max till 59.5.
It's really not good financial planning if you can avoid it, and there are restrictions. Like you have to leave your money in the 401k and not move it to an IRA, which potentially limits your investment options. Talk to a financial planner if you are considering this.
A lot of people are unaware of this provision and, oddly, companies dont educate employees about it either. Maybe because the companies dont understand it as well.