Leveraging the Rule of 55 for retiring clients

Reporter: David LaMartina

Publication: ThinkAdvisor


Deadline: Apr 11, 2017 7:00 pm

This story will be featured in a new, retirement-focused section of Nationwide’s ThinkAdvisor website. The new section will be similar in content to the previously featured Retirement Wire: The usual age for tax-sheltered 401(k) withdrawals is 59 ½, but the little-known Rule 55 allows employees who leave their jobs at 55 to withdraw without penalty. This seems to be a good option in some clients’ cases – company buyouts, downsizing, self-employment opportunities, etc. But is it really? For whom (and when) is it a good idea to leverage Rule 55? Should advisors tell more of their retiring and soon-to-be retiring clients about this option? What do advisors and their clients need to know about Rule 55 – pros, cons, potential penalties, tax implications, etc.? Finally, why isn’t the rule more well-known? Are there better early 401(k) distribution options? How can advisors better help clients who have the need or opportunity to retire early? Requirements: I would like to interview one or two financial advisors who have specifically dealt with Rule 55 as they’ve advised retiring clients. Which strategies did your clients ultimately use, and why?

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