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Learning, Sharing, and Teaching => Investor Alley => Topic started by: jom2025 on February 11, 2017, 08:58:48 AM

Title: utilizing age 55 rule for 401k
Post by: jom2025 on February 11, 2017, 08:58:48 AM
Hello MMM community

 I will be utilizing the IRS age 55 rule on an early retirement for living expenses.

401k is thru Fidelity I was told thru the plan set up from my employer and Fidelity (once retired) i can only make a once a year withdrawal.

Any suggestions on where to place this one time sum,other than a checking account?   As i will be using these funds as my income source, while placing other assets into other investments. 

Thank you for all replies
Title: Re: utilizing age 55 rule for 401k
Post by: Indexer on February 11, 2017, 09:22:42 AM
Congrats on retiring!

Do NOT roll the 401(k) into an IRA. You probably already knew that, but doing so would ruin the age 55 rule so I just wanted to  make sure you knew that. ;)

If you are taking out a withdrawal to cover an entire year's worth of expenses then I would put it in something very safe, most likely a high yield money market account. There are a few online banks paying around 1%.

Even a conservative investment like short term bonds or VASIX can have down years where they are down 5-10%. If you take out 1 year's worth of expenses then being down 10% means you run out of spending money in November, not fun. Just stick with the money market/savings.