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401( k ) S E P A R A T I O N OF S E R V I C E DISTRIBUTION PACKET4010 Boy Scout Blvd., Suite 450 Tampa, Florida 33607 Ph: 866.634.5873 Fx: 813.425.9790 www.aspireonline.com401(k) Separation of Service.

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The Separation from Service exception sometimes called “Rule of 55” or “55 Rule” is an IRS provision that allows workers who leave their job for any reason to start taking penalty-free distributions from their current employer's retirement plan once they've reached age 55.

The IRS defines separation from service as the severance of an employee's ties with an employer, based on the continued provision of services and not on the legal status of the employee.

A bona fide separation of service is an IRS requirement that has two parts: A legitimate break in service and. No prearranged future employment with employers covered under the MoDOT & Patrol Employees' Retirement System (MPERS) or the Missouri State Employees' Retirement System (MOSERS).

Separated from Service means the termination of an employment relationship between the Company and an Employee resulting from resignation, discharge, retirement, or failure to return from work after an authorized leave of absence.

The separation of service rule states that if an employee who is participating in a company retirement plan, such as a 401(k) plan, leaves the employer during the year in which they turn age 55 or older, distributions from the retirement plan are not subject to the additional 10 percent tax penalty.

Separated from Service means the termination of an employment relationship between the Company and an Employee resulting from resignation, discharge, retirement, or failure to return from work after an authorized leave of absence.

This is where the rule of 55 comes in. If you turn 55 during the calendar year you lose or leave your job, you can begin taking distributions from your 401(k) without paying the early withdrawal penalty. However, you must still pay taxes on your withdrawals.

You can begin taking in-service withdrawals from a retirement account if you are still employed at age 59½. If you take it out sooner, you will be subject to a 10% early-withdrawal penalty (in addition to any deferred taxes due).

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© Copyright 1997-2025
airSlate Legal Forms, Inc.
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Form Packages
Adoption
Bankruptcy
Contractors
Divorce
Home Sales
Employment
Identity Theft
Incorporation
Landlord Tenant
Living Trust
Name Change
Personal Planning
Small Business
Wills & Estates
Packages A-Z
Form Categories
Affidavits
Bankruptcy
Bill of Sale
Corporate - LLC
Divorce
Employment
Identity Theft
Internet Technology
Landlord Tenant
Living Wills
Name Change
Power of Attorney
Real Estate
Small Estates
Wills
All Forms
Forms A-Z
Form Library
Customer Service
Terms of Service
Privacy Notice
Legal Hub
Content Takedown Policy
Bug Bounty Program
About Us
Blog
Affiliates
Contact Us
Delete My Account
Site Map
Industries
Forms in Spanish
Localized Forms
State-specific Forms
Forms Kit
Legal Guides
Real Estate Handbook
All Guides
Prepared for You
Notarize
Incorporation services
Our Customers
For Consumers
For Small Business
For Attorneys
Our Sites
US Legal Forms
USLegal
FormsPass
pdfFiller
signNow
airSlate WorkFlow
DocHub
Instapage
Social Media
Call us now toll free:
+1 833 426 79 33
As seen in:
  • USA Today logo picture
  • CBC News logo picture
  • LA Times logo picture
  • The Washington Post logo picture
  • AP logo picture
  • Forbes logo picture
© Copyright 1997-2025
airSlate Legal Forms, Inc.
3720 Flowood Dr, Flowood, Mississippi 39232