RMDs & IRAs

Rule of 55: Check If You Qualify and See the Savings

The Rule of 55 lets you take money from your current employer's 401(k) or 403(b) without the 10% early-withdrawal penalty if you leave that job in or after the calendar year you turn 55, or 50 for public safety workers. Enter your birth year and the year you leave to check, and see the penalty you'd avoid.

IRC §72(t)(2)(A)(v) Verified October 23, 2026

Your details

Your birth year

Year you left (or will leave) the job

Public safety employee (police, firefighter, EMS, corrections, air traffic control…)

Where the money is

Amount you plan to take before 59½

$

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Rule of 55

You qualify

You leave in 2026, the year you turn 56 — on or after the year you turn 55. Withdrawals from that plan skip the 10% penalty: $6,000 saved.

Qualifying year

2025+

Penalty avoided

$6,000

Income tax still owed

Yes

ordinary income rates

Don't roll it over first

The exception covers only the plan of the employer you left. Roll it into an IRA and the money loses the Rule of 55 until 59½. Older plans from previous jobs don’t qualify either — unless you rolled them into this plan before leaving.

Show the math

IRC §72(t)(2)(A)(v): no 10% additional tax on distributions from a qualified plan after separation from service in or after the year you turn 55 (50 for qualified public safety employees). It’s the calendar year that matters, not your birthday. Plans aren’t required to allow partial withdrawals, so check your plan’s rules.

Next stepWhat you keep after taxFederal tax, the 20% withholding and state tax on the withdrawal.

Email these results

How does the Rule of 55 work?

It's the calendar year that counts, not your birthday. If you turn 55 at any point in the year you leave your job — even in December, and you left in January — withdrawals from that employer's plan are free of the 10% penalty from then on. (IRS: exceptions to tax on early distributions)

Born	Leave in	Turn 55 that year?	Penalty-free?
1971	2025	No (54)	No
1971	2026	Yes	Yes
1971, firefighter	2021	Turns 50	Yes (age-50 rule)

Office worker carrying a box on the last day of work — Photo: Pavel Danilyuk / Pexels

Rule of 55 401(k): What Counts and What Does Not (IRAs Don't)

The exception covers only the plan of the employer you just left. It doesn't follow your money anywhere else, and it never applies to IRAs. Income tax is still due on every dollar (IRS Topic 413).

Account	Penalty-free under the Rule of 55?
401(k) or 403(b) of the employer you left	Yes
Plans from earlier jobs	No — unless rolled into this plan before you left
IRA, including a rollover IRA	No
Governmental 457(b)	No penalty at any age after you leave

Man in his fifties fishing on a calm lake — Photo: beytlik / Pexels

Our take: don't roll it over at 55

Many people roll their 401(k) into an IRA the week they retire. If you might need the money before 59½, that move turns penalty-free money into penalized money. Leave it in the plan, take what you need, and see what you keep on the 401(k) withdrawal tax calculator. Not 55 yet? The early withdrawal penalty calculator lists the other exceptions, and the how long will my money last calculator tests an early retirement.

Frequently asked questions

Can I go back to work after using the Rule of 55?

Yes. The exception is tied to leaving the employer whose plan you're drawing from. A new job later doesn't undo it.

Does my plan have to allow it?

Your plan must allow distributions after you leave. Some only offer a full lump sum or limit how often you can take partial withdrawals, so ask before you separate.

Will taxes be withheld?

Yes. Payouts that could be rolled over have 20% federal income tax withheld. The Rule of 55 removes the penalty, not the income tax.

Does it work for pensions?

Yes. The separation-from-service exception applies to qualified employer plans, including defined benefit pensions, not just 401(k)s.

Sources

Primary sources only. We re-check them whenever an agency publishes new figures.

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Where people go next

Early Withdrawal Penalty CalculatorThe 10% early withdrawal penalty plus tax before 59½, after checking the exceptions.Open 401(k) Withdrawal Tax CalculatorWhat you keep from a 401(k) or IRA withdrawal after federal tax, withholding and any penalty.Open How Long Will My Money LastThe year your savings run out (or don't) with inflation-adjusted withdrawals and Social Security.Open