MONEY MATTERS: 401k Penalties
What's the age or the cutoff when you can actually get that money and not be penalized?
Age 59 and half is the general rule. If you're 59 and half you can start taking income out of it and won't have to worry about a 10 percent penalty. You'll still pay tax on it, whatever bracket you happen to be in at the time.
Are there exceptions around that 59 and half years?
There's a rule called the 72t. And if you take equal periodic payments out of it then you can get around the 10 percent penalty. For example say someone is fifty-four years old. They retire, they need their money and they're worried about the 10 percent penalty, if you use the rule 72t, you start taking money out and the IRS has a table. There's three different brackets you can choose from and you got to start taking it out. And once you turn that on you can not shut it off for which is longer until you're 59 and half or five years. So long as its open and the money's going somewhere .
Are there ever any with a 401k or an IRA any instances where perhaps health problem or a family emergency would allow you to dip into that without those type of penalties?
Yes and that is one exception to the rules in an IRA. If it's for a medical expense or a death or disability and there's even some rules in there you can wave the 10 percent penalty for a first time home buyer.