Rule of 55 Calculator
Access your 401(k) before age 59½ without the 10% early withdrawal penalty. Model year-by-year withdrawals with investment growth, taxes, and Social Security bridge planning.
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Rule of 55 Calculator
Model penalty-free 401(k) withdrawals with investment growth & Social Security bridge
You Qualify for Rule of 55!
You can withdraw from your 401(k) penalty-free.
Social Security Bridge
Full Retirement Age (FRA) for most
10% Penalty Avoided
$4,000/year
$18,000 total savings until age 59½
Annual Withdrawal Comparison
Withdrawal Rate
8.0%
Balance Lasts
30+ yrs
SS Bridge Gap
12 yrs
401(k) Balance Projection
Your 401(k) is projected to sustain withdrawals through age 90 with 6% annual returns and Social Security starting at 67.
Your withdrawal rate of 8.0% is above the recommended 4%. Consider reducing withdrawals or supplementing with other income.
Important Notes
- • Rule of 55 only applies to the 401(k) of the employer you're leaving
- • Previous employer 401(k)s and IRAs don't qualify
- • Don't roll over to an IRA — you'll lose Rule of 55 eligibility
- • You still owe income tax on withdrawals
- • Projections assume constant returns — actual results will vary
- • SS benefit estimates are pre-tax. Up to 85% of SS may be taxable.
What is the Rule of 55?
The Rule of 55 (also called the "separation from service" rule) is an IRS provision that lets you withdraw from your 401(k) or 403(b) without the 10% early withdrawal penalty if you leave your employer during or after the year you turn 55.
Normally, withdrawing from retirement accounts before age 59½ triggers a 10% penalty on top of regular income tax. The Rule of 55 eliminates that penalty, potentially saving you thousands of dollars if you plan to retire early.
Save 10%
Avoid the 10% early withdrawal penalty on every dollar you withdraw.
Flexible Access
Take as much or as little as you need - no required minimum distributions.
Bridge to 59½
Access funds for 4+ years before traditional penalty-free age.
Do You Qualify?
Age 55+ in year of separation
You must turn 55 during the calendar year you leave your employer. If you turn 55 on December 31st and leave January 1st of the same year, you qualify.
Current employer's 401(k) only
The rule applies only to the 401(k) from the employer you're leaving. Previous employer 401(k)s and IRAs don't qualify.
Any separation reason
You can quit, be laid off, retire, or be terminated. The reason for leaving doesn't matter.
Don't roll over to IRA
If you roll your 401(k) to an IRA, you lose Rule of 55 eligibility. Keep funds in the 401(k) if you plan to use this rule.
Public Safety Workers: Rule of 50
Police officers, firefighters, EMTs, and other public safety workers can use this rule starting at age 50 instead of 55. Check with your plan administrator for eligibility.
Rule of 55 vs Other Options
| Option | Age | Accounts | Flexibility |
|---|---|---|---|
| Rule of 55 | 55+ | Current employer 401(k) | High - choose your amount |
| 72(t)/SEPP | Any age | Any IRA or 401(k) | Low - fixed payments for 5+ years |
| Roth Contributions | Any age | Roth IRA only | High - contributions only |
| Wait until 59½ | 59½+ | All accounts | High - full access |
Common Mistakes to Avoid
Rolling over to an IRA
Once you roll your 401(k) to an IRA, you lose Rule of 55 eligibility for those funds. Only roll over if you don't plan to use this rule.
Leaving before the year you turn 55
If you leave in December at age 54 and turn 55 in January, you don't qualify. The separation must occur during or after the year you turn 55.
Thinking it applies to old 401(k)s
The rule only applies to the 401(k) from the employer you're leaving at 55+. Previous employer 401(k)s don't qualify (unless you roll them in first).
Forgetting about taxes
You still owe income tax on all traditional 401(k) withdrawals. The Rule of 55 only eliminates the 10% penalty, not the tax.
Frequently Asked Questions
What is the Rule of 55?
The Rule of 55 (also called the "separation from service" rule) is an IRS provision that allows you to withdraw money from your 401(k) or 403(b) without the 10% early withdrawal penalty if you leave your employer during or after the year you turn 55. You still owe regular income tax, but you save 10% compared to early withdrawal.
How much can I save with the Rule of 55?
You save 10% on every dollar withdrawn. For example, withdrawing $100,000 from your 401(k) at age 56 saves you $10,000 in penalties. On a $500,000 401(k), that is $50,000 saved. You still pay income tax, but the penalty savings are significant for early retirees.
Who qualifies for the Rule of 55?
You qualify if: (1) You leave your employer during or after the calendar year you turn 55, (2) The 401(k) is with the employer you are leaving (not a previous employer), and (3) You take distributions from that specific 401(k), not an IRA. Public safety workers can use the rule starting at age 50.
Does the Rule of 55 apply to IRAs?
No. The Rule of 55 only applies to 401(k) and 403(b) plans from the employer you are leaving. IRAs do not qualify. Critical: Do NOT roll over your 401(k) to an IRA if you plan to use the Rule of 55 - you will lose eligibility for those funds.
Can I use the Rule of 55 if I was laid off?
Yes. The Rule of 55 applies regardless of why you left - whether you quit voluntarily, were laid off, or retired. The only requirement is separation from service during or after the year you turn 55.
What about 401(k)s from previous employers?
The Rule of 55 only applies to the 401(k) from the employer you are leaving at 55+. However, you can consolidate old 401(k)s into your current employer plan BEFORE leaving to make them eligible. Do this at age 54 if planning to retire at 55.
Rule of 55 vs 72(t) SEPP - which is better?
Rule of 55 is better when you qualify. It offers flexibility - withdraw any amount, any time. 72(t)/SEPP requires fixed payments for 5 years minimum and has harsh penalties if you modify payments. Only use 72(t) if you need IRA access or left before 55.
Do I still pay taxes with Rule of 55 withdrawals?
Yes. Rule of 55 only eliminates the 10% early withdrawal penalty. You still owe regular income tax on traditional 401(k) withdrawals. Tip: Spread withdrawals across multiple years to stay in lower tax brackets.
Can I take partial withdrawals with Rule of 55?
Yes. You can take as much or as little as you need each year - there is no minimum. This flexibility makes Rule of 55 ideal for bridging the gap to age 59½. Check your plan rules for distribution frequency limits.
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Not financial advice. This calculator is for educational purposes only and does not constitute financial, tax, or investment advice. Results are estimates based on the inputs you provide and historical data. Consult a qualified financial advisor for personalized guidance. Read our editorial guidelines.