Just because you think of yourself as retired doesn’t mean the IRS agrees for the purposes of taking money out of your qualified retirement plans, including IRA, 401k and 403b accounts. Once you’ve reached age 59 and 1/2, you can take the money out without penalty. But if you withdraw prior to then, the IRS adds an extra 10 percent tax penalty on the taxable portion of your distribution.
If an exception applies, however, you can avoid the withdrawal penalty. For 401k and 403b accounts, one exception is if you retire after turning 55. On the other hand, IRAs allow early distributions to pay for higher education costs (including for your kids) and insurance premiums while you’re unemployed.
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