FAQ - ANSWER

I am 52 and taking an early retirement package with my company. If I would have worked until 55 I would not have to pay the 10% early retirement penalty on my 401k. If I begin to take distribution now under the Substantially Equal Payment rules, will I still be exempt from the 10% penalty when I turn 55?

Answer: Once you start taking retirement distributions under the “Substantially Equal Payment” rules, you must continue to take them for five years or age 59½, which ever is the longest. Therefore, you can not change the distribution method when you reach age 55 and still be exempt from the 10% penalty.

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