Retirement » Fund Your 401(k) Or IRA First?Are you planning to retire early?9 of 12A 401(k) could make withdrawals for early retirement a little simpler. With 401(k) plans and traditional IRAs (though not Roth IRAs), the standard retirement age is 59½, says Bogosian. For certain withdrawals before that age, you may owe a 10 percent tax penalty, plus any applicable state and federal income taxes, he says.With a 401(k), people who leave employment after age 55 (even those who later rejoin the workforce) "can take a taxable distribution with no 10 percent penalty," says Bogosian. "IRAs have no such 'age 55' option, unless someone wants to take substantially equal payments, which is also an option in 401(k) plans."More On IRAs:How to avoid 8 IRA mistakesIRAs more than retirement savingsBasics of IRAsFund your 401(k) or IRA first?6 surprising IRA investment optionsVideo: How to invest in a Roth IRAVideo: Fund IRA or 401(k) first?Create a news alert for "retirement"
Retirement » Fund Your 401(k) Or IRA First?
A 401(k) could make withdrawals for early retirement a little simpler. With 401(k) plans and traditional IRAs (though not Roth IRAs), the standard retirement age is 59½, says Bogosian. For certain withdrawals before that age, you may owe a 10 percent tax penalty, plus any applicable state and federal income taxes, he says.
With a 401(k), people who leave employment after age 55 (even those who later rejoin the workforce) "can take a taxable distribution with no 10 percent penalty," says Bogosian. "IRAs have no such 'age 55' option, unless someone wants to take substantially equal payments, which is also an option in 401(k) plans."
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