Best Retirement Account for Retiring Early

[andrew321]

Hi Folks,
This is my first time posting here.  I'm about to get a $20,000 raise and want to save in the FIRE mindset.  My options for tax advantaged account are a Roth IRA, Traditional IRA, a low-fee governmental 457(b) in MA, or a 403(b).  I am currently in a low tax bracket, so I'm thinking contributing on a Roth basis is the smart way to go.

My problem is this: I will want access to these accounts, assuming all goes well, before my late 50s.  Do any of them allow me to withdraw money without penalty before the minimum age?  I read that 457s have some flexibility there, but was hoping someone could clarify it for me.  I tried reading the IRS website; sadly, my reading comprehension skills aren't quite strong enough.

[katsiki]

Welcome!

Check this out: https://www.madfientist.com/how-to-access-retirement-funds-early/

[bacchi]

Yes, 457s are the easiest to pull money from. Generally, once you quit, you can withdraw your money and it's taxed at your current tax rate.

tIRAs also are pretty easy to get money out of using a "Roth conversion." You have to pay more attention to your total income but it's a straightforward process.

Your Roth contributions (directly to your Roth IRA), along with any brokerage accounts, can be used to bridge the gap while you wait for your conversions to "bake" (there's a 5 year wait period for the tIRA conversions to turn into Roth tax-free withdrawals).


Personally, if the 457 plan has good choices and is stable, I'd max it. Then I'd start with the Roth.

[CoffeeR]

My problem is this: I will want access to these accounts, assuming all goes well, before my late 50s.  Do any of them allow me to withdraw money without penalty before the minimum age?  I read that 457s have some flexibility there, but was hoping someone could clarify it for me.  I tried reading the IRS website; sadly, my reading comprehension skills aren't quite strong enough.

The 457b pre-tax is the best choice. You have access to the amount in this account after you leave employment regardless of age. Paradoxically, the 457b Roth (if you have that option) does not allow for penalty free withdrawal after job separation and maybe the worst option... do not use that unless you understand the rules. If you want to go Roth, a regular Roth or 403b Roth (if you have that option) is better for most people over a 457b Roth.

[cincystache]

Welcome!

Check this out: https://www.madfientist.com/how-to-access-retirement-funds-early/

+1

[andrew321]

Thank you all for your help!  I'm going to do my reading and maybe come back to ask a few more questions.  +1 to all of you!