Author Topic: Distribution Strategy post-FIRE?  (Read 859 times)

wing117

  • Stubble
  • **
  • Posts: 149
  • Age: 31
  • Location: North Carolina
Distribution Strategy post-FIRE?
« on: February 02, 2015, 03:55:07 PM »
Hey folks!

I just started Phase I of ramping up my contributions to my 401k, 403b, 457b and IRA accounts over the next year. Once complete (at their maximums) This will leave me with little extra to invest in taxable accounts. My question is:

How do you start to access these accounts before 59 1/2 without penalty? Do you solely rely on the Roth Conversion Ladder? Are there other means for early distributions? Should I also be looking at active income sources (such as rentals, etc...) to offset? Should I cut back on Tax Advantaged accounts and place more into a brokerage account?

Thanks!

seattlecyclone

  • Magnum Stache
  • ******
  • Posts: 4637
  • Age: 34
  • Location: Seattle, WA
Re: Distribution Strategy post-FIRE?
« Reply #1 on: February 02, 2015, 06:47:07 PM »
I just started Phase I of ramping up my contributions to my 401k, 403b, 457b and IRA accounts over the next year. Once complete (at their maximums) This will leave me with little extra to invest in taxable accounts.

The 457(b) plan is an awesome option for the early retiree because there are no early distribution penalties. Max that out first (after contributing enough to your other employer-based accounts to max out your match, of course). If you do it right, you'll have several years' worth of expenses in the 457(b) and taxable accounts by the time you retire.

Quote
How do you start to access these accounts before 59 1/2 without penalty? Do you solely rely on the Roth Conversion Ladder? Are there other means for early distributions? Should I also be looking at active income sources (such as rentals, etc...) to offset? Should I cut back on Tax Advantaged accounts and place more into a brokerage account?

I'm planning to live off of taxable funds for the first few years of retirement, then the Roth pipeline after that.

Besides the Roth conversion ladder, there are also 72(t) SEPP distributions. These seem less flexible than the Roth pipeline, but I don't know all the details about these.