The hard truth first
IRAs do NOT have a general age-55 rule.
If you withdraw from an IRA at 55, you normally owe:
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10% early-withdrawal penalty
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+ income tax (for traditional IRA)
That’s the default.
But — there are ways to get money at 55 without the 10% penalty
Option 1: SEPP / Rule 72(t) — most common
This is the main legal workaround for IRAs.
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You take Substantially Equal Periodic Payments (SEPP)
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Payments must:
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Be calculated using IRS formulas
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Continue for at least 5 years OR until age 59½, whichever is longer
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Once started, you cannot change or stop without triggering penalties retroactively
Example
Start at 55 → must continue until 60 (5 years beats 59½)
No 10% penalty
Still pay income tax
Very rigid — little flexibility
Option 2: Roth IRA contributions (if applicable)
If you have a Roth IRA:
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Your original contributions (not earnings) can be withdrawn anytime, at any age
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No penalty, no tax
Earnings are different — those still get penalized before 59½ unless an exception applies.
Option 3: Specific exceptions (situational)
Penalty may be waived for:
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Disability
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Certain large medical expenses
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Health insurance premiums while unemployed
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First-time home purchase (up to $10,000 lifetime)
These are narrow and usually not ideal for early retirement income.
Important confusion to avoid
You might hear about the “Rule of 55” — that applies to 401(k)s, not IRAs.
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If you leave your job in the year you turn 55
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You can withdraw from that employer’s 401(k) penalty-free
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But once you roll it into an IRA, that rule is gone
Bottom line
If your goal is living off retirement money at 55:
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Best IRA-only path → SEPP (72(t))
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Best overall strategy → use Rule of 55 with a 401(k) before rolling to an IRA
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Roth contributions help a lot if you have them
If you want, tell me:
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Is your money in a Traditional IRA, Roth IRA, or 401(k)?
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Are you planning early retirement at 55, or just a one-time withdrawal?
I can help you design a clean, low-penalty plan instead of an expensive mistake
