Quitting before age 55 incurs retirement plan penalty

Learn how leaving your medical practice before 55 can incur sizeable penalties.

A: No. In almost all cases, you will incur a penalty if you take money from a qualified retirement plan before you reach age 59 1/2. One exception allows you to "separate from service" (quit) at age 55 or later. To avoid the 10% penalty using this exception, however, you must actually work until the calendar year in which you turn 55 or older and then separate from service. Because you quit at age 53, waiting until age 55 for distribution does not allow you to avoid the 10% penalty (in addition to income taxes).