Rule of 55 Calculator: 401(k) Withdrawals Without the 10% Additional Tax
The Rule of 55 lets you take money from your current employer's 401(k) or 403(b) without the 10% additional tax if you leave that job in or after the calendar year you turn 55. Qualified public safety workers can use age 50 or 25 years of service. It does not apply to IRAs, and regular income tax still applies.
Figures checked November 2026 against IRS guidance.
Rule of 55 Calculator
Yes, this looks like it qualifies. You leave the job in 2026, the year you turn 56, and the money is in that employer's plan.
10% additional tax avoided
$5,000
20% withheld if paid to you
$10,000
Check after withholding
$40,000
The 20% is a prepayment toward your income tax, not a separate tax. This assumes the whole amount is taxable. Regular income tax still applies and depends on your total income. If you are already 59½ when you take the money, the 10% additional tax does not apply in any case.
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How the Rule of 55 Works
Withdrawals before age 59½ from a retirement plan generally carry a 10% additional tax on the taxable amount. Section 72(t)(2)(A)(v) of the tax code makes an exception for employees who separate from service in or after the year they reach 55.
The job has to end in or after the year you turn 55
The IRS test is the calendar year. If you turn 55 in December and leave in February of that year, you meet it. If you leave the year before, you do not, and you cannot fix that by waiting until 55 to take the money.
It covers the plan from the job you left
The exception is tied to separating from service with the employer that sponsors the plan. A 401(k) from a job you left at 49 does not qualify. IRS Publication 575 uses almost exactly that example.
It works for 401(k) and 403(b) plans, not IRAs
The IRS table marks this exception yes for qualified plans and no for IRAs, SEP IRAs, SIMPLE IRAs, and SARSEPs. If you roll the money into an IRA, the Rule of 55 no longer applies to it.
Governmental 457(b) plans work differently
These distributions are not subject to the 10% additional tax at any age, so the Rule of 55 is not needed. The exception is money that came into the 457(b) by rollover from another type of plan or an IRA.
Regular income tax still applies
The Rule of 55 removes only the 10% additional tax. The taxable amount is still ordinary income for the year you take it.
20% is generally withheld
A taxable distribution paid to you from an employer plan is generally subject to mandatory 20% federal withholding. It is a prepayment of your tax. Your actual tax bill can be higher or lower. A direct rollover has no withholding.
Your plan decides how you can take the money
The tax rule does not require your plan to offer partial withdrawals. Some plans may pay only a lump sum or limit how often you can withdraw. Ask your plan administrator before you leave the job.
A Worked Example
Someone born in 1971 turns 55 in 2026. They leave their job in March 2026, at age 54, and their birthday is in October. They take $50,000 from that employer's 401(k) and the whole amount is taxable.
- 10% additional tax: $0, because the job ended in the year they turn 55. Without the exception it would be $5,000.
- 20% withholding: $10,000 goes to the IRS as a prepayment, so the check is $40,000.
- Income tax: the $50,000 is added to their other income for 2026 and taxed at their regular rates.
Rule of 55 for Public Safety Employees: Age 50 or 25 Years
Qualified public safety employees in a governmental plan have used age 50 instead of 55 for years. The SECURE 2.0 Act of 2022 widened this in three ways. Section 329 added the service test, so the exception now applies at the earlier of age 50 or 25 years of service under the plan. Section 308 extended it to private-sector firefighters. Section 330 added state and local corrections officers and forensic security employees.
The IRS lists these groups:
- State and local public safety employees in a governmental plan, including state or local corrections officers and forensic security employees
- Specified federal law enforcement officers, corrections officers, and customs and border protection officers
- Federal firefighters and air traffic controllers
- Private-sector firefighters
Your plan administrator can confirm whether your job counts and how your years of service are measured.
Rule of 55 vs. 72(t) vs. a Regular Early Withdrawal
Swipe the table sideways to see all columns.
| Rule | Rule of 55 | 72(t) / SEPP | Regular early withdrawal |
|---|---|---|---|
| Age test | Job ends in or after the year you turn 55 | No minimum age | Under 59½ |
| Accounts | 401(k), 403(b), and other qualified plans from that employer | IRAs and qualified plans | IRAs and qualified plans |
| Must you leave the job? | Yes | Yes for a plan, no for an IRA | Only if your plan requires it |
| 10% additional tax | None | None if the rules are followed | 10% of the taxable amount |
| Regular income tax | Yes | Yes | Yes |
| Payment amounts | Whatever your plan allows | Fixed by an IRS method | Your choice, within plan or IRA rules |
| How long it lasts | No required schedule | Later of 5 years or age 59½ | One withdrawal at a time |
| If you change course | No recapture | Recapture tax if the payments are modified early | Not applicable |
For the 72(t) payment amounts, use the 72(t) SEPP calculator. Later on, required withdrawals come into play, and the RMD calculator shows those.
Rule of 55 Frequently Asked Questions
What is the Rule of 55?▼
The Rule of 55 is the common name for an IRS exception. If you leave your job in or after the calendar year you turn 55, withdrawals from that employer's 401(k) or 403(b) are not subject to the 10% additional tax on early distributions. The rule is in Internal Revenue Code section 72(t)(2)(A)(v). Regular income tax still applies.
Does the Rule of 55 apply if I retire at 54?▼
It depends on your birthday. The test is the calendar year you turn 55, so someone who is 54 when they leave but turns 55 later that same year meets it. If you leave in an earlier year, you do not.
Does the Rule of 55 apply to an IRA?▼
No. The IRS says this exception does not apply to IRAs, SEP IRAs, SIMPLE IRAs, or SARSEPs. If you roll your 401(k) into an IRA before age 59½, the exception is gone for that money, although other exceptions may apply.
Can I use the Rule of 55 on an old 401(k)?▼
Only if you left that employer in or after the year you turned 55. If you left that job earlier, withdrawals from that plan do not qualify, even after you turn 55.
Do I have to stop working completely?▼
The IRS test is separating from service with the employer that sponsors the plan. The rule's wording does not address a later job with a different employer. If you plan to go back to the same employer, ask your plan administrator or a tax professional first.
Is the Rule of 55 age 50 for public safety workers?▼
Yes, for qualified public safety employees and private-sector firefighters. SECURE 2.0 also added a service test: the separation must be in or after the year you reach age 50 or 25 years of service under the plan, whichever comes first.
Is the 20% withholding the tax I owe?▼
No. It is a prepayment. Your final tax depends on your total income for the year. You report the distribution on your tax return and either owe more or get money back.
Does the Rule of 55 apply to the TSP?▼
The IRS says the public safety exception at age 50 covers governmental plans such as the TSP. For other federal employees, ask the TSP or your agency how the separation rule applies to your account.
Rule of 55 or 72(t): which one applies to me?▼
They work differently. The Rule of 55 needs a job that ended in or after the year you turn 55 and money in that employer's plan. A 72(t) series has no minimum age and works for IRAs, but the payments follow a fixed method until the later of 5 years or age 59½.
Not sure what fits your situation?
Answer a few short questions about your savings and goals. You get a plain-English summary of your options. Free, about 60 seconds.
Take the 60-second quizSources & References
- IRS: Retirement topics, exceptions to tax on early distributions
- IRS Topic no. 558: Additional tax on early distributions from retirement plans other than IRAs
- IRS Topic no. 557: Additional tax on early distributions from traditional and Roth IRAs
- IRS Publication 575: Pension and Annuity Income
- IRS Notice 2026-13: Safe harbor explanations, including SECURE 2.0 sections 308, 329, and 330
- IRS: Rollovers of retirement plan and IRA distributions
- IRS Topic no. 413: Rollovers from retirement plans
- IRS: Substantially equal periodic payments
Last verified: November 5, 2026
This page explains how the rule works and is not tax or legal advice. Your plan administrator can confirm what your plan allows.