There is a little known provision in the IRS tax code called the “Rule of 55” that allows clients who have a 401(k) plan with an old employer to take distributions in any amount prior to 59 1/2 without penalty. Here’s the catch: you have to have been at least 55 years old when you either retired, quit or were terminated from the company that sponsors that plan. For example, if Jim Smith (57) has a 401(k) with an old employer, but last worked for that employer at age 52, he would not be able to access this money prior to 59 1/2 without penalty through the “Rule of 55” provision. If, however, he last worked for that employer at age 55, he would be able to access the full value of the 401(k) with no penalty, even prior to 59 1/2.