This is a little-known rule that is available to participants of 401k’s and 403b’s. The rule says you can withdraw money from these accounts when you terminate employment at age 55 without paying a penalty. You still must pay the income tax on the money, but there is no penalty.
The rule goes into effect on January 1st of the year that you turn age 55, so if your birthday is in November or December you can actually withdraw money at age 54 without a penalty.
Why might this be important? If we have a serious economic catastrophe, this may be welcome news. It also provides an opportunity to move money from “forever taxed” to “never taxed.”
See more in the Fool’s article, The Little-Known (but Totally Legal) Way to Tap Your 401(k) Early Without Penalty
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