Penalties: How do you take money out of IRA and 401k after ER?

[MrsG]

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?

[Gone Fishing]

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

[dandarc]

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

[MrsG]

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/

[Beric01]

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).

[dbtx]

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


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[Icecreamarsenal]

This was a very helpful post. Thanks

[dandarc]

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.