When to withdraw money from a 401k account?
On One Hand: When You Are EligibleYou can start taking withdrawals from your 401k account when you reach either age 59 1/2 or if you are 55 when you leave your job. The money will come out penalty-free, but you will have to include it as taxable income.On the Other: When You Turn 70 1/2When you turn 70 1/2, you must start taking required minimum distributions from your 401k plans unless you are still working. If you fail to withdraw the required amount, you will owe a tax penalty of 50 percent of the undistributed amount.Bottom LineYou should take money out of your 401k plan as you need it as long as you have reached the age requirements. Because the money is counted as taxable income, you are better off if you take more money out when you have less taxable income because you will pay a lower tax rate.
