If you need to tap your retirement plan, withdrawing money from an IRA before age 59 1/2 may expose you to a 10 percent early withdrawal penalty, in addition to income tax. There are exceptions to this rule but these exceptions are limited.
However, you can take money from an employer-sponsored plan, penalty-free, if you were at least 55 years old in the year you left your job. In between ages 55 and 59 1/2, therefore, you’re probably better off keeping your money in an employer-sponsored retirement plan, such as the federal government’s TSP. This strategy may permit you to take penalty-free distributions.
