Author Topic: Does anyone take dividends from there 401k in fire before 59?  (Read 733 times)

texxan1

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Does anyone take dividends from there 401k in fire before 59?
« on: October 12, 2020, 02:29:05 PM »
Curious to know if anyone is taking out Dividends quarterly to live on out of there 401k/IRA

I am gonna fire pretty damn quick and looking at all the possibilities for cash flow. I know i would have to pay tax on those dividends but also the way i understand it there would be no penalty.

My 401k is currently with Fidelity, but when i leave the company i will move it to Vanguard as an IRA and as i would be looking for how to invested it to get maximum dividends while still maintaining max growth.

Anyone got any ideas on this.?????

49m/31f   

1,089,000 in vanguard after tax
998,000 in Fidelity 401k
388,000 lump sum pension i will get in january and put into Vanguard IRA

No Debt

Thanks

TEX

terran

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Re: Does anyone take dividends from there 401k in fire before 59?
« Reply #1 on: October 12, 2020, 02:38:20 PM »
If you withdraw from a 401(k)/IRA before the year your turn 59.5 there is 10% penalty in addition to the tax on the full withdrawal, but there are a few loopholes to this. https://www.madfientist.com/how-to-access-retirement-funds-early/ offers a good explanation of your options.

UnleashHell

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seattlecyclone

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Re: Does anyone take dividends from there 401k in fire before 59?
« Reply #3 on: October 12, 2020, 04:34:06 PM »
There is a little-known quirk in 401(k) plans that include an employer stock ownership option, where you can take direct payments of dividends from employer stock at any age, no penalty. Dividends from other investments won't qualify for this treatment, nor will this option survive a transfer to an IRA.

I wouldn't worry too much about early withdrawals in your case. You have ten years until the older spouse is able to make qualified withdrawals, and a million bucks in post-tax to withdraw from in the meantime. Should be enough, right?

texxan1

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Re: Does anyone take dividends from there 401k in fire before 59?
« Reply #4 on: October 12, 2020, 04:46:07 PM »
There is a little-known quirk in 401(k) plans that include an employer stock ownership option, where you can take direct payments of dividends from employer stock at any age, no penalty. Dividends from other investments won't qualify for this treatment, nor will this option survive a transfer to an IRA.

I wouldn't worry too much about early withdrawals in your case. You have ten years until the older spouse is able to make qualified withdrawals, and a million bucks in post-tax to withdraw from in the meantime. Should be enough, right?

yeah, should be fine but was trying to put together a more solid plan with options.

We will have about another 300k in cash as well , so were pretty good... Just playing out all the options on paper..

She wont be working and when im done in the next few months, were gonna travel some and fish the rest lol

seattlecyclone

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Re: Does anyone take dividends from there 401k in fire before 59?
« Reply #5 on: October 12, 2020, 05:41:14 PM »
There is a little-known quirk in 401(k) plans that include an employer stock ownership option, where you can take direct payments of dividends from employer stock at any age, no penalty. Dividends from other investments won't qualify for this treatment, nor will this option survive a transfer to an IRA.

I wouldn't worry too much about early withdrawals in your case. You have ten years until the older spouse is able to make qualified withdrawals, and a million bucks in post-tax to withdraw from in the meantime. Should be enough, right?

yeah, should be fine but was trying to put together a more solid plan with options.

We will have about another 300k in cash as well , so were pretty good... Just playing out all the options on paper..

She wont be working and when im done in the next few months, were gonna travel some and fish the rest lol


Sure, options are good! No need to shift your retirement accounts to a dividend-heavy investment mix, as the withdrawals will generally be taxed the same whether they equal your dividend payments or not.

 

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