59 1 2 rule 401k | BTCC Knowledge

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Can I withdraw 401(k) money before 59 1/2?

You may face a 10% early withdrawal penalty if you withdraw 401 (k) money before age 59 1/2. RMDs begin the year you turn 73 for traditional 401 (k)s. Some plans allow for penalty-free hardship withdrawals. A 401 (k) is a tax-advantaged retirement account you can contribute to with pre-tax money.

Are 401(k) contributions taxable after 59 1/2?

While the penalty disappears after 59 1/2, you'll still be liable for the income taxes. If you have a Roth 401 (k) account, the contributions are made with after-tax dollars. Roth withdrawals are tax-free, as long as you've had the account open at least five years.

Can a 5912 401(k) be used as a safety net?

Now that you’re 59½ and the withdrawal penalty is gone, you can actually use your 401 (k) as an easily accessible, tax-deferred safety net. In a retirement account, you can even invest some of the money for growth, though you do want to keep some in cash for emergencies.

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