Legally you can start making withdrawals from your 401k plan once you reach the age of 59 ½ years old. There are some exceptions that will allow you start making withdrawals at the age of 55, but this may have penalties or additional taxes attached to the withdrawal. The government will attach a 10% additional penalty in addition to taxes due for early withdrawal of funds from your 401k.
Am I old enough to retire?
You can retire at any age that you wish in all reality. But, at whatever age you choose to retire you can not make withdrawals from your 401k prior to you reach the minimum age of 59 1/2 years old. A few plans that are on the market may make you wait until you reach the age of 65.
At what age can I start withdrawing from my 401k plan if I do not retire?
The answer here is the same. Law requires that you reach the minimum age of 59 ½ before being eligible to make withdrawals from your 401k plan regardless of employment status. Some plans will notify employees immediately when disbursements are available even if they are still working. Due to the economic times we are currently in, it may be wise to leave the money in the 401k as long as possible.
What if I become disabled?
If you become disabled there may be provisions in your plan that allows you to make early withdrawals from your 401k without penalty at age 55. You will need to consult with your plan provider to see what options are available for the disabled individual.