Basically, you agree to take a series of equal payments (at least one per year) from your account. They begin after you stop working, continue for life (yours or yours and your beneficiary's) and generally have to stay the same for at least five years or until you hit 59½ (whichever comes last). A lot of rules apply to this option, so be sure to check with a qualified financial advisor first. You leave your job. This works only if it happens in the year you turn 55 or later (50 if you work in federal law enforcement, federal firefighting, customs, border protection or air traffic control). You have to divvy up a 401(k) in a divorce. If the court's qualified domestic relations order in your divorce requires cashing out a 401(k) to split with your ex, the withdrawal to do that might be penalty-free. Other exceptions might get you out of the 10% penalty if you're cashing out a 401(k) or making a 401(k) early withdrawal: You become or are disabled. Payments were made to your beneficiary or estate after you died.
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