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Learning, Sharing, and Teaching => Ask a Mustachian => Topic started by: MrsG on November 18, 2014, 03:00:09 PM

Title: Penalties: How do you take money out of IRA and 401k after ER?
Post by: MrsG on November 18, 2014, 03:00:09 PM

So when you retire early, what’s up with those penalties for taking the money out of 401k and IRA’s? If I plan on retiring early, says I can’t take out the money till I’m 59  1/2 without incurring penalties.

How does one go about taking the money out of these accounts? Eat the penalties?

Title: Re: Penalties: How do you take money out of IRA and 401k after ER?
Post by: Gone Fishing on November 18, 2014, 03:04:45 PM

What you need is called an IRA Ladder.  Read the first link in my signature below for details. 

Title: Re: Penalties: How do you take money out of IRA and 401k after ER?
Post by: dandarc on November 18, 2014, 03:08:56 PM

Read up on Roth IRA Ladder, and Substantially Equal Periodic Payments.

Title: Re: Penalties: How do you take money out of IRA and 401k after ER?
Post by: MrsG on November 18, 2014, 03:23:36 PM

Thanks for the point in the right direction.

Using the search terms you gave me, I found this excellent blog post from JL Collins on the exact strategies.

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

Title: Re: Penalties: How do you take money out of IRA and 401k after ER?
Post by: Beric01 on November 18, 2014, 03:26:05 PM

Quote from: MrsG on November 18, 2014, 03:23:36 PM

Thanks for the point in the right direction.

Using the search terms you gave me, I found this excellent blog post from JL Collins on the exact strategies.

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

Yup! This is probably the best article on the Roth ladder (IMO the superior strategy).

Title: Re: Penalties: How do you take money out of IRA and 401k after ER?
Post by: dbtx on November 19, 2014, 06:28:37 PM

There is also 72t withdrawals. That's what I plan on doing though it looks like you have to be very careful with them.

http://72t.net/

Dave


Sent from my iPad using Tapatalk

Title: Re: Penalties: How do you take money out of IRA and 401k after ER?
Post by: Icecreamarsenal on November 21, 2014, 10:24:40 AM

This was a very helpful post. Thanks

Title: Re: Penalties: How do you take money out of IRA and 401k after ER?
Post by: dandarc on November 24, 2014, 03:20:14 PM

Quote from: Beric01 on November 18, 2014, 03:26:05 PM

Quote from: MrsG on November 18, 2014, 03:23:36 PM

Thanks for the point in the right direction.

Using the search terms you gave me, I found this excellent blog post from JL Collins on the exact strategies.

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

Yup! This is probably the best article on the Roth ladder (IMO the superior strategy).

Yes - good to remember the 72t (SEPP) option if your Roth ladder proves inadequate to cover income needs down the road though.  Involves a 5 year prediction, so this is a possibility.