Being over 59 1/2 only gets you out of early withdrawal penalties for traditional 401(k) plans, not the taxes on the distributions.
Traditional 401(k) plans offer tax-deferred savings, which means that since the contributions were never included in your taxable income, you have to pay taxes on them when you take the money out.
Since the creation of the 401(k) and other employer-sponsored retirement plans, most advisers and investors have focused on how to get money into them — not necessarily how to best take money out of them.
Now, with baby boomers entering their retirement years at a rate of over 10,000 a day, investors have to change their focus from accumulation of assets to generating a lifetime of income from these assets.
Worse yet, this additional 10 percent is calculated based on the entire withdrawal – not just what you receive after taxes.
Whether you are transitioning to a new employer or retiring from the workforce, you'll want to avoid some very common — — mistakes. ’ Upon leaving a company at age 55 or older, a former employee can take penalty-free withdrawals from their company-sponsored 401(k) account.Companies offer 401(k) plans to help their employees stash away money for retirement.But, to encourage people to use 401(k)s for retirement savings, there are only a few circumstances that enable you to access your money once it's in the plan.After you turn 60, however, getting your funds isn't a problem.As soon as you turn 59 1/2, you're allowed to access the funds in your 401(k) plan whenever you want, even if you're still working for the company.