When are you 59.5 year old for penalty free withdrawal?

[Pacun]

Tax payer will be 59 and a half years old on October 30, 2023.  He withdrew $100K from his current employer 401k plan on January 2nd 2023. Will he have to pay $10K penalty on that withdrawal?  He used that money for vacations. I think I have read that you have the whole calendar year when you are becoming 59.5 years old to withdraw without penalty but it doesn't sound right. 

[Lee B]

The wording is before the owner reaches 59 1/2 not the year in which the owner turns 59 1/2.

[Pacun]

My question would be a nice task for chatGPT since the rules have been here for a while.  I will see if others reply to my post. 

[kathyc2]

72(t)(2) clearly states:  made on or after the date on which the employee attains age 59½

Since it was a 401K penalty can be avoided if separated from service at time of withdrawal. 

[jklcpa]

Age 59 1/2 is 6 months after the taxpayer attains age 59.  It was covered in this topic a few years ago.  From the top of that topic, scroll down to see my first answer that has a link too.

 

[DANRVAN]

Penalty does not apply to distributions taken on or after the date taxpayer turns 59 1/2.   See section 72(t)(1)