If an investor aged 52 wishes to transfer funds from a 401(k) plan to an IRA account, what is a relevant statement?

When an investor aged 52 transfers funds from a 401(k) plan to an IRA, there is no penalty involved in this specific scenario. The Internal Revenue Service (IRS) allows for such transfers or rollovers without imposing a penalty as long as the transfer follows the proper procedures.

Typically, when individuals withdraw funds from a 401(k) before reaching the age of 59½, they face a 10% early withdrawal penalty. However, the transfer from a 401(k) to an IRA is generally categorized as a rollover rather than a withdrawal. Rollovers are not subject to these early withdrawal penalties, making this option beneficial for individuals wishing to manage their retirement assets more flexibly.

It is important to ensure that the transfer is performed correctly, typically via a direct rollover, to avoid potential tax implications or penalties. This allows the investor to avoid penalties while maintaining the tax-deferred status of their retirement savings.