The Money Mustache Community

Learning, Sharing, and Teaching => Ask a Mustachian => Topic started by: BrianT on October 03, 2014, 12:11:06 PM

Title: How do I withdraw early from 401k and/or IRA without penalty?
Post by: BrianT on October 03, 2014, 12:11:06 PM

My 401k and Rollover IRA have been working well for me, and I'm counting on withdrawing from it as part of early retirement. Right now I am 32 years old, and from my rough calculations, I should be able to retire early at 45 - through a combination of stock/index funds and paid off rental properties.

Can someone help me with how the process works to withdraw early from retirement accounts without incurring the early withdrawal penalty? I know it involves a waiting period and transfer into a Roth. Any help with articles or comments would be MUCH APPRECIATED!!!

Title: Re: How do I withdraw early from 401k and/or IRA without penalty?
Post by: dandarc on October 03, 2014, 12:13:30 PM

Search "Substantially Equal Periodic Payments" and "Roth Pipeline" - these are two ways to get at traditional 401K money early and avoid the penalty.  The approach you asked about specifically is the Roth Pipeline.

Title: Re: How do I withdraw early from 401k and/or IRA without penalty?
Post by: 4alpacas on October 03, 2014, 12:14:56 PM

http://jlcollinsnh.com/2013/12/05/stocks-part-xx-early-retirement-withdrawal-strategies-and-roth-conversion-ladders-from-a-mad-fientist/

Title: Re: How do I withdraw early from 401k and/or IRA without penalty?
Post by: BrianT on October 03, 2014, 12:30:43 PM

Thank you! This is exactly what I needed. Reading this stuff is making me all giddy inside.

Title: Re: How do I withdraw early from 401k and/or IRA without penalty?
Post by: boulder3381 on April 17, 2015, 10:03:26 AM

Quote from: 4alpacas on October 03, 2014, 12:14:56 PM

http://jlcollinsnh.com/2013/12/05/stocks-part-xx-early-retirement-withdrawal-strategies-and-roth-conversion-ladders-from-a-mad-fientist/ (http://jlcollinsnh.com/2013/12/05/stocks-part-xx-early-retirement-withdrawal-strategies-and-roth-conversion-ladders-from-a-mad-fientist/)

This article was incredibly helpful and addressed the questions I've been holding about FIRE and investing in tax shelter accounts.