The age limits most commonly associated with 401(k) plans are 59½ and 70½. The first is usually the age at which you may begin to take money from your tax-deferred savings without owing a 10% early withdrawal penalty, provided that you’ve left your job. The second is the age by which you must begin taking mandatory withdrawals—though in fact you actually have until April 1 of the year following the year you turn 70½ to take the first withdrawal.
 For example, if you turn 70 in January 2008, you’ll be 70½ in July 2008. You must make your first withdrawal by April 1, 2009. But if your birthday is in July, you won’t turn 70½ until January 2009. So you’d have to begin withdrawals by April 1, 2010.
In most cases, you can begin withdrawing from your 401(k) account when you retire from your job, provided you’ve reached your employer’s retirement age. In fact, some employers require you to start withdrawing when you retire if your money is in the plan. Instead, you could take a lump-sum withdrawal or transfer the balance into an individual retirement account (IRA).
If you’re still working at 70½, you can postpone withdrawals from your 401(k) until April 1 of the year following the year you retire. The only exception occurs if you own at least 5% of the company. Then you can’t postpone taking income and must begin withdrawals on the regular schedule.
| Social Security's Retirement Estimator Determining the best age to start receiving retirement benefits depends on a number of individual and family factors, including the amount of your future Social Security benefit. Get a personalized online estimate of your potential Social Security benefit, and see how that benefit varies across different retirement scenarios, using the Retirement Estimator.
|
|
