What Is the Rule of 55?

Definition & Examples of the Rule of 55

BY MELISSA PHIPPS REVIEWED BY THOMAS J. CATALANO, Updated October 06, 2020

The Rule of 55 is a regulation set in place by the IRS that allows those 55 and older to withdraw funds from their 401(k) or 403(b) without receiving a tax penalty.1

Learn more about the Rule of 55, plus how to know if this IRS exception applies to you.

What Is the Rule of 55?

If you have a 401(k) plan, you probably already know that there is usually a 10% penalty for withdrawing any of the funds before you reach age 59 1/2.2 But there are some exceptions to this early distribution rule, and one of them affects pre-retirees in particular.

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