Author Topic: Anyone looking to early retire doing a 72(t)?  (Read 2578 times)

TwoWorlds

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Anyone looking to early retire doing a 72(t)?
« on: January 02, 2018, 04:29:32 PM »
I don't understand all the rules but I know you can take money out of your retirement before 59 1/2 and not pay the 10% penalty.  You still pay normal taxes but no penalty.

This is a tool for people that have most of their savings in retirement but very little outside of retirement.

Any information would be helpful if you have done this or know something about it.

Vapour

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Re: Anyone looking to early retire doing a 72(t)?
« Reply #1 on: January 02, 2018, 10:48:15 PM »
Check out this thread: https://forum.mrmoneymustache.com/investor-alley/how-to-withdraw-funds-from-your-ira-and-401k-without-penalty-before-age-59-5/

I think the Roth Pipeline is a better plan than 72t/SEPP.  It's much more flexible.  The main downside to SEPP is that once you start, you can't stop until age 59.5 and a minimum of 5 years.  For those of us planning to retire in our 30s or 40s, that's a long time to commit to.  If you decide to go back to work, you'll still need to keep taking out of your IRA every year.  You also don't have the flexibility in the amount taken out each year.  If you do the Roth pipeline, you can choose exactly how much to convert.  This could help you pay lower taxes and possibly get healthcare subsidies.  The only potential issue I see with the Roth pipeline is that you can't get at that money for 5 years.  You'll need enough money in a taxable account or as Roth contributions (not earnings) to last 5 years.  I don't have experience with either, but the Roth pipeline is my plan for more flexibility.

VoteCthulu

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Re: Anyone looking to early retire doing a 72(t)?
« Reply #2 on: January 02, 2018, 10:53:33 PM »
https://seattlecyclone.com/accessing-your-retirement-accounts-early-yes-you-can/
A 72t is good for those 50+ who don't want to wait 5 years for a Roth pipeline to come online, but for the younger crowd it's not nearly as flexible.

Polish_Hammer

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Re: Anyone looking to early retire doing a 72(t)?
« Reply #3 on: January 03, 2018, 06:01:53 AM »
https://seattlecyclone.com/accessing-your-retirement-accounts-early-yes-you-can/
A 72t is good for those 50+ who don't want to wait 5 years for a Roth pipeline to come online, but for the younger crowd it's not nearly as flexible.
That is it in a nutshell.  I'm 50 and 1-2 yrs from FIRE ,with traditional IRA so its 72T

Bateaux

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Re: Anyone looking to early retire doing a 72(t)?
« Reply #4 on: January 03, 2018, 06:07:25 AM »
I'm still not sure what we're going to do.  I'm 49 and may FIRE as close as 2019.  I'm tempted to just keep working till 2023 when I turn 55.  Less time to live with a healthy body but, with a big bag of cash and all my company benefits.   Currently sitting on 1.9M in investments so FIRE is possible today actually.  There are so many things I want to travel to see that I'd love to do it earlier. 

Polish_Hammer

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Re: Anyone looking to early retire doing a 72(t)?
« Reply #5 on: January 03, 2018, 06:16:31 AM »
I'm still not sure what we're going to do.  I'm 49 and may FIRE as close as 2019.  I'm tempted to just keep working till 2023 when I turn 55.  Less time to live with a healthy body but, with a big bag of cash and all my company benefits.   Currently sitting on 1.9M in investments so FIRE is possible today actually.  There are so many things I want to travel to see that I'd love to do it earlier.
1.9 at 49 you rock!.  I'm at 1.2 and only "waiting" on the kids 24, 22, 19 to be on their own

Bateaux

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Re: Anyone looking to early retire doing a 72(t)?
« Reply #6 on: January 03, 2018, 06:21:14 AM »
The kids are an issue here as well.  23 and 24.  Still covering their health care till at least mid 2019.

frugalnacho

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Re: Anyone looking to early retire doing a 72(t)?
« Reply #7 on: January 03, 2018, 09:16:08 AM »
I'm still not sure what we're going to do.  I'm 49 and may FIRE as close as 2019.  I'm tempted to just keep working till 2023 when I turn 55.  Less time to live with a healthy body but, with a big bag of cash and all my company benefits.   Currently sitting on 1.9M in investments so FIRE is possible today actually.  There are so many things I want to travel to see that I'd love to do it earlier.

What are you waiting for? If you have enough to FIRE today, why would you spend the next 6 years working?  Of your very limited time left you are going to spend the youngest and healthiest 6 years working a job you don't need to.

Dada Almond

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Re: Anyone looking to early retire doing a 72(t)?
« Reply #8 on: January 03, 2018, 11:20:53 PM »
For OP, Mad Fientist has another good explanation of 72(t) vs. Roth pipeline here: https://www.madfientist.com/how-to-access-retirement-funds-early/

Bateaux

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Re: Anyone looking to early retire doing a 72(t)?
« Reply #9 on: January 04, 2018, 08:49:05 AM »
I'm still not sure what we're going to do.  I'm 49 and may FIRE as close as 2019.  I'm tempted to just keep working till 2023 when I turn 55.  Less time to live with a healthy body but, with a big bag of cash and all my company benefits.   Currently sitting on 1.9M in investments so FIRE is possible today actually.  There are so many things I want to travel to see that I'd love to do it earlier.

What are you waiting for? If you have enough to FIRE today, why would you spend the next 6 years working?  Of your very limited time left you are going to spend the youngest and healthiest 6 years working a job you don't need to.
The desire to travel will likely trump the desire for security and wealth before 2020.

Catbert

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Re: Anyone looking to early retire doing a 72(t)?
« Reply #10 on: January 04, 2018, 11:57:11 AM »
The kids are an issue here as well.  23 and 24.  Still covering their health care till at least mid 2019.

Remember if a lot of your retirement money is in 401ks rather than IRAs you can access it without penalty if you leave the company in the year in which you turn 55.  But and less complicated than a Roth ladder, but you'd have to stick around until 55.