Did you know that you can withdraw funds from your Roth IRA, traditional IRA, 401k, Roth 401k, TSP, Roth TSP, 403b, or 457b* before age 59.5 and without a penalty? It's true!
The secret is using the Roth IRA Conversion Pipeline ("Roth Pipeline") and/or Substantially Equal Periodic Payments (SEPP--also called 72t).For the Roth Pipeline, the simple steps are
1) Open a Roth IRA
2) Figure out how much you want to withdraw from your 401k/tIRA 5 years from now
3) Move that amount from your 401k/tIRA to your Roth IRA (called a "conversion"), paying any normal income tax due on that amount. No penalty will be due.
4) The next year, and each year thereafter, repeat steps 2 and 3
5) After your converted funds have been sitting in the Roth IRA for 5 tax years (i.e. becoming "seasoned") they can be withdrawn without paying any further tax or penalty. The 5 year rule starts counting the beginning of the tax year you convert it, so it doesn't actually have to "season" for 5 years. For example if you convert some money from your traditional IRA to your ROTH IRA on December 31, 2015 you can take that contribution out penalty free on January 1, 2020 which is only 4 years and 1 day.For SEPP:
The rules are somewhat complicated and I won't go into too much detail here. It's much less flexible than the Roth Pipeline. You choose 1 of 3 different IRS-approved methods to define payments that are "substantially equal". Then you are locked into using that same method to withdraw substantially equal amounts from your account(s) each year until the year you turn 59.5. If you deviate from that plan then you are retroactively assessed a 10% penalty on all payments previously withdrawn using the SEPP method. Whether you pay the penalty or not, SEPP distributions are taxable as income--even distributions from a Roth IRA.Here are some links that explain these in more detail:https://seattlecyclone.com/accessing-your-retirement-accounts-early-yes-you-can/http://jlcollinsnh.com/2013/12/05/stocks-part-xx-early-retirement-withdrawal-strategies-and-roth-conversion-ladders-from-a-mad-fientist/
You can also withdraw any Roth IRA contributions
(but not earnings) at any time. The same applies for Roth 401k contributions once you have separated from the employer sponsoring your Roth 401k plan.
Please feel free to comment on this thread, ask questions, or add additional clarifying information. I will keep editing this original post to improve it over time.
*Note that for 457b plans you can take funds from this account BEFORE age 59.5 with NO penalty, and NO need to do the pipeline method. https://www.bogleheads.org/wiki/457(b