Tax Playbook · Keep more of each paycheck
Rule of 55: tap the 401(k) early, skip the 10% penalty
Leave your job in or after the year you turn 55, and you can take money from that employer's 401(k) without the usual 10% early penalty. On a $50,000 withdrawal, that saves $5,000. The withdrawals are still taxed as income — just no penalty. Public safety workers can start at 50, and do not roll the money into an IRA first, because the rule works only inside the employer's plan.
Good for: People retiring early, at 55 or later, who need 401(k) money before age 59½.
Learn the basics
Recent articles & guides
- Case of the Week: Understanding the 'Rule of 55' (NAPA)
- Rule of 55 401k: Guide to Penalty-Free Early Withdrawals (SoFi)
- Why would someone lock up money by rolling it into a 401(k)? (MarketWatch)
On this site
Related strategies
529 plans — and the Roth rolloverA 529 is a savings jar for college: the money grows tax-free, and many states give you a tax break for putting…Max out pre-tax retirement accountsPut money in a 401(k) before taxes are taken out, and you skip paying tax on it this year. In 2026 you can put…Backdoor Roth IRAMake too much money for a Roth IRA? There's a legal workaround: put money in a regular IRA without taking a ta…Mega backdoor RothSome 401(k) plans let you put in extra after-tax money — far more than the normal limit — and then slide it in…HSA: the triple tax breakAn HSA is the only account with three tax breaks in one: money goes in tax-free, grows tax-free, and comes out…Solo 401(k) for side gigsIf you run your own business, you can save for retirement as both boss and worker. In 2026 you can put in up t…
Browse all 97 strategies in the interactive playbook
Educational summary, not tax advice. Limits and rules change — confirm current law with your tax adviser.