question about the 10% early withdrawal penalty

[UnleashHell]

I haven't been able to see a clear answer on this so here it goes.

I'm not yet 55 and have separated from my employer.

If I choose not to go back to work then I may do the following

IRA 1) use the sepp 72 (t) to take 20k a year.
IRA 2) take out 20k a year to get to my annual spend

The 10% penalty would be assessed on IRA 2

total income is 40k

my tax free allowance would then be 10k and a tax rate of 12% on the balance roughly. Plus the 10% on the 20k
total tax would then be 30k * 12% plus 20k * 10%


Now if I have further deductions I can make (I can itemize and have depreciation on a rental property and property taxes etc) how does this affect my tax?


If I can reduce the taxable amount by another 20K to only have 10k above the tax free amount does that make my taxes lower?
does it then become 30k tax free and 10K at 12% plus 10% penalty on the 10K (for a total of 22% of 10K - 2200)
or is it 12% on the 10K plus 10% on the 20K for a total of 3200?

Or am I missing something.

In other words even if I got my total taxable down to zero due to allowances would I still have to pay the 10% penalty on the second 20K or would I see my tax bill at zero?

[seattlecyclone]

Taking more deductions beyond the standard deduction will reduce your income, and your regular tax will probably go down in the process. The 10% early withdrawal tax is separate from this. You'd be paying 10% of the $20k regardless of whatever other deductions you may have.

[terran]

You seem to be missing the 10% bracket. If you only have $10k of taxable income after deductions most (if you're single) or all of it (if you're married) would be taxed at the 10% bracket. With the penalty you could end up paying nothing if you qualify for refundable tax credits like the child tax credit, but this is money you'd get back anyway, so the penalty is still costing you 10%, just from lost credits instead of money you pay in.

Do you not have enough in taxable and/or Roth contributions to cover expenses for 5 years while you get a Roth conversion ladder going? Even if you don't it might make sense to do some Roth conversions into the 12% bracket so you can reduce/eliminate withdrawals with a penalty after 5 tax years (but only do enough to cover you the few years after that until the year in which you turn 59.5). If you're paying 10% anyway then paying an extra 2% now to avoid the 10% penalty later could make sense. Although, once you consider ACA subsidies in this if that's how you get health insurance it could be close to a wash or worse if you're near one of the thresholds that changes how the subsidies work more drastically.

[Dicey]

What about using 72(t) at an accelerated rate to deplete IRA #1 and leave IRA #2 to grow until there's no penalty?

[UnleashHell]

Thanks @seattlecyclone @terran and @Dicey
having a rental and alimony means I can leverage deductions to bring the tax burden down to a very low level. I'll run the numbers and may be able to do a roth conversion that will cover the couple of years before I hit 59.5 - the other option is go back to work, gat a 401k, roll my new IRA into it and quit as soon as January. problem is I don't want to work and then 'd be quitting my new job after a few months - may not be possible to get the 401k up and running in time and its a shitty thing to do to them.

the rates I have to use on the 72 (T) means I can't quite generate enough to cover my expenses. I guess I could get a heloc and draw on that for a while to cover the difference. Or borrow the money elsewhere - that might be cheaper. Or work part time.
theres that dirty 4 letter word again......

lots to think about!!

[secondcor521]

Are both IRA1 and IRA2 yours?

If so, you could move money from IRA2 to IRA1 to increase the size of the 72(t) as much as possible and minimize the 10% penalty as much as possible.  So you might be looking at a $30K 72(t) and a $10K withdrawal instead of $20K/$20K.

Alternatively, if you don't want to move money, you can split IRA2 into IRA2.1 and IRA2.2, and take a second 72(t) from IRA2.1 and your 10% penalized withdrawals from IRA2.2.  You can have more than one 72(t) program going at once, and you can in fact use different approved methods for each 72(t) if you want to.

Note that you must take SEPPs for 5 years or until 59.5, whichever is longer.  Since your profile says you're 53 now, that would mean until you turn 59.5 if you start any time soon.

[UnleashHell]

@secondcor521

yep - both mine.

the problem with the 72(t) is that the amount you can take is so low due to the inflation figures used by the IRS. Thats why I want ira2 to make up any difference.

I do have rental income as well but I want sufficient in IRA2 to cover any difference that may arise. adding a 72(t) to that  - even if split - reduces my flexibility.

of course I may be over thinking this... :D

[Dicey]

@secondcor521

yep - both mine.

the problem with the 72(t) is that the amount you can take is so low due to the inflation figures used by the IRS. Thats why I want ira2 to make up any difference.

I do have rental income as well but I want sufficient in IRA2 to cover any difference that may arise. adding a 72(t) to that  - even if split - reduces my flexibility.

of course I may be over thinking this... :D

It's likely that your rental income will increase and your expenses will decrease. You will have time to dig into travel hacking, and possibly chasing checking account bonuses., etc.

Other thought: before you depart the job officially, open a HELOC on the rental in case of lumpy maintenance expenses. You may not ever need it, but it will stop the worry over the possibility.

[secondcor521]

@secondcor521

yep - both mine.

the problem with the 72(t) is that the amount you can take is so low due to the inflation figures used by the IRS. Thats why I want ira2 to make up any difference.

I do have rental income as well but I want sufficient in IRA2 to cover any difference that may arise. adding a 72(t) to that  - even if split - reduces my flexibility.

of course I may be over thinking this... :D

Yep, I understand.  I think it's just up to you to decide the tradeoff between spending flexibility and paying the 10% penalty.

Have you looked at all three withdrawal methods to see if any of them give you a higher withdrawal?  I assumed so which is why I didn't mention it before.

[UnleashHell]

@secondcor521

yep - both mine.

the problem with the 72(t) is that the amount you can take is so low due to the inflation figures used by the IRS. Thats why I want ira2 to make up any difference.

I do have rental income as well but I want sufficient in IRA2 to cover any difference that may arise. adding a 72(t) to that  - even if split - reduces my flexibility.

of course I may be over thinking this... :D

Yep, I understand.  I think it's just up to you to decide the tradeoff between spending flexibility and paying the 10% penalty.

Have you looked at all three withdrawal methods to see if any of them give you a higher withdrawal?  I assumed so which is why I didn't mention it before.

@secondcor521
yup - run a few different calculators to see the outcomes. could do with the fed tables having a higher interest! of course that may happen by the time I'm ready to pull the payments - its 1.28% right now.

[Retireatee1]

I'd work very hard to find a way around paying the 10% penalty.  You've already mentioned the Roth conversion ladder, and I would make that work if possible.

I like the idea of starting a new job to get over the age 55  threshold.  Then you have options with any balances rolled into the corresponding 401k.

[lhamo]

I like the idea of starting a new job to get over the age 55  threshold.  Then you have options with any balances rolled into the corresponding 401k.

In theory, yes -- but it depends on the rules of the employer's plan.  My sister was frustrated to find that her employer did not allow for regular withdrawals.  She can do a one-time withdrawal of any amount between age 55-59.5, or she could roll the whole account over to an IRA (which then eliminates the age 55+ withdrawal option). She had enough in other accounts to make her plan work and can tap the 401k if she needs to, but it was more complicated than she had originally planned.

[Retireatee1]

I like the idea of starting a new job to get over the age 55  threshold.  Then you have options with any balances rolled into the corresponding 401k.

In theory, yes -- but it depends on the rules of the employer's plan.  My sister was frustrated to find that her employer did not allow for regular withdrawals.  She can do a one-time withdrawal of any amount between age 55-59.5, or she could roll the whole account over to an IRA (which then eliminates the age 55+ withdrawal option). She had enough in other accounts to make her plan work and can tap the 401k if she needs to, but it was more complicated than she had originally planned.

Is that right?  I was not aware an employer could place such restrictions on 401K withdrawals.  So this is only the case until age 59 1/2?

[secondcor521]

I like the idea of starting a new job to get over the age 55  threshold.  Then you have options with any balances rolled into the corresponding 401k.

In theory, yes -- but it depends on the rules of the employer's plan.  My sister was frustrated to find that her employer did not allow for regular withdrawals.  She can do a one-time withdrawal of any amount between age 55-59.5, or she could roll the whole account over to an IRA (which then eliminates the age 55+ withdrawal option). She had enough in other accounts to make her plan work and can tap the 401k if she needs to, but it was more complicated than she had originally planned.

Is that right?  I was not aware an employer could place such restrictions on 401K withdrawals.  So this is only the case until age 59 1/2?

It is correct.  Federal law allows for rule of 55 withdrawals, but the employer plan also has to allow it and may choose to apply restrictions.  It's generally advised to read the plan documents or check with HR to see if one's 401(k) is implemented well in this area before relying on the rule of 55.

[seattlecyclone]

Yep. The law requires employers to let you leave your money in the plan to grow when you quit, but they don't have to facilitate periodic withdrawals. These add to the administrative cost of the plan, and many employers would prefer you roll over to an IRA than impose that cost on them.

[Retireatee1]

I like the idea of starting a new job to get over the age 55  threshold.  Then you have options with any balances rolled into the corresponding 401k.

In theory, yes -- but it depends on the rules of the employer's plan.  My sister was frustrated to find that her employer did not allow for regular withdrawals.  She can do a one-time withdrawal of any amount between age 55-59.5, or she could roll the whole account over to an IRA (which then eliminates the age 55+ withdrawal option). She had enough in other accounts to make her plan work and can tap the 401k if she needs to, but it was more complicated than she had originally planned.

Is that right?  I was not aware an employer could place such restrictions on 401K withdrawals.  So this is only the case until age 59 1/2?

It is correct.  Federal law allows for rule of 55 withdrawals, but the employer plan also has to allow it and may choose to apply restrictions.  It's generally advised to read the plan documents or check with HR to see if one's 401(k) is implemented well in this area before relying on the rule of 55.

That's good to know, I'll have to check into that for myself.

[terran]

This is basically what lhamo said, but just to make sure everyone is clear on the rule of 55... withdrawals from a workplace plan when you separated from service from the employer that sponsors the plan in or after the year you turn 55 won't incur a 10% early withdrawal penalty. That's IRS policy and nothing the employer does or says can change that. What the employer can do is restrict how withdrawals can be taken. At the very worst you can always make a full withdrawal and roll most of it over to an IRA, but keep a certain amount out to help pay expenses until you're 59.5 and can make withdrawals from the IRA without a penalty. This isn't ideal since it probably means you'll need to make a larger taxable withdrawal in that one year than you would otherwise, but at least it lets you get some money out of the 401(k) early without a penalty regardless of the employer's withdrawal rules.

[Retireatee1]

This is basically what lhamo said, but just to make sure everyone is clear on the rule of 55... withdrawals from a workplace plan when you separated from service from the employer that sponsors the plan in or after the year you turn 55 won't incur a 10% early withdrawal penalty. That's IRS policy and nothing the employer does or says can change that. What the employer can do is restrict how withdrawals can be taken. At the very worst you can always make a full withdrawal and roll most of it over to an IRA, but keep a certain amount out to help pay expenses until you're 59.5 and can make withdrawals from the IRA without a penalty. This isn't ideal since it probably means you'll need to make a larger taxable withdrawal in that one year than you would otherwise, but at least it lets you get some money out of the 401(k) early without a penalty regardless of the employer's withdrawal rules.

This is just one more reason to have a portion of your retirement savings in a Roth account (IRA or 401k).  If you have enough cost basis to cover five years worth of expenses, you can retire at 55 without as much anxiety about the tax man.  Then you can also ladder any before-tax balances into a Roth so you are filling in those lower tax brackets during those five years.

[Dicey]

This is just one more reason to have a portion of your retirement savings in a Roth account (IRA or 401k).  If you have enough cost basis to cover five years worth of expenses, you can retire at 55 without as much anxiety about the tax man.  Then you can also ladder any before-tax balances into a Roth so you are filling in those lower tax brackets during those five years.

While I'm sure that's probably the complete truth as it's written (I'm not a tax professional), this response does not help us help our friend, Hellboy. Telling him he did it wrong, especially in his current circumstances, is rather heartless unhelpful, IMO.

[secondcor521]

This is just one more reason to have a portion of your retirement savings in a Roth account (IRA or 401k).  If you have enough cost basis to cover five years worth of expenses, you can retire at 55 without as much anxiety about the tax man.  Then you can also ladder any before-tax balances into a Roth so you are filling in those lower tax brackets during those five years.

While I'm sure that's probably the complete truth as it's written (I'm not a tax professional), this response does not help us help our friend, Hellboy. Telling him he did it wrong, especially in his current circumstances, is rather heartless unhelpful, IMO.

True.  I tried to help OP in my first several posts on this thread, because I try to be helpful.

But to try to be helpful here to both of you, there may be other people who come along and read this thread who are, unlike OP, in a position to change what they do because they're earlier in their planning phase.  So having the idea may not be helpful to OP but may be helpful to others.

[Dicey]

This is just one more reason to have a portion of your retirement savings in a Roth account (IRA or 401k).  If you have enough cost basis to cover five years worth of expenses, you can retire at 55 without as much anxiety about the tax man.  Then you can also ladder any before-tax balances into a Roth so you are filling in those lower tax brackets during those five years.

While I'm sure that's probably the complete truth as it's written (I'm not a tax professional), this response does not help us help our friend, Hellboy. Telling him he did it wrong, especially in his current circumstances, is rather heartless unhelpful, IMO.

True.  I tried to help OP in my first several posts on this thread, because I try to be helpful.

But to try to be helpful here to both of you, there may be other people who come along and read this thread who are, unlike OP, in a position to change what they do because they're earlier in their planning phase.  So having the idea may not be helpful to OP but may be helpful to others.

On that point we can agree. However, UH, aka Hellboy, has done an incredible job of pulling his shit together after his life and FIRE plans imploded several years ago. IMO, he's the last one who deserves a reprimand. He asked for help in his very specific circumstances, and received the lecture quoted above.

[secondcor521]

This is just one more reason to have a portion of your retirement savings in a Roth account (IRA or 401k).  If you have enough cost basis to cover five years worth of expenses, you can retire at 55 without as much anxiety about the tax man.  Then you can also ladder any before-tax balances into a Roth so you are filling in those lower tax brackets during those five years.

While I'm sure that's probably the complete truth as it's written (I'm not a tax professional), this response does not help us help our friend, Hellboy. Telling him he did it wrong, especially in his current circumstances, is rather heartless unhelpful, IMO.

True.  I tried to help OP in my first several posts on this thread, because I try to be helpful.

But to try to be helpful here to both of you, there may be other people who come along and read this thread who are, unlike OP, in a position to change what they do because they're earlier in their planning phase.  So having the idea may not be helpful to OP but may be helpful to others.

On that point we can agree. However, UH, aka Hellboy, has done an incredible job of pulling his shit together after his life and FIRE plans imploded several years ago. IMO, he's the last one who deserves a reprimand. He asked for help in his very specific circumstances, and received the lecture quoted above.

Fair enough.  I have this weird thing where most posters here blend into one persona, so I don't keep track of individuals and thus missed the aspect of it which you described.  @UnleashHell, my condolences for the implosion Dicey refers to, and if Dicey says you've done an incredible job then I believe Dicey and am impressed.

[Dicey]

This is just one more reason to have a portion of your retirement savings in a Roth account (IRA or 401k).  If you have enough cost basis to cover five years worth of expenses, you can retire at 55 without as much anxiety about the tax man.  Then you can also ladder any before-tax balances into a Roth so you are filling in those lower tax brackets during those five years.

While I'm sure that's probably the complete truth as it's written (I'm not a tax professional), this response does not help us help our friend, Hellboy. Telling him he did it wrong, especially in his current circumstances, is rather heartless unhelpful, IMO.

True.  I tried to help OP in my first several posts on this thread, because I try to be helpful.

But to try to be helpful here to both of you, there may be other people who come along and read this thread who are, unlike OP, in a position to change what they do because they're earlier in their planning phase.  So having the idea may not be helpful to OP but may be helpful to others.

On that point we can agree. However, UH, aka Hellboy, has done an incredible job of pulling his shit together after his life and FIRE plans imploded several years ago. IMO, he's the last one who deserves a reprimand. He asked for help in his very specific circumstances, and received the lecture quoted above.

Fair enough.  I have this weird thing where most posters here blend into one persona, so I don't keep track of individuals and thus missed the aspect of it which you described.  @UnleashHell, my condolences for the implosion Dicey refers to, and if Dicey says you've done an incredible job then I believe Dicey and am impressed.

Does that mean all mustachians look alike? (/j)

[UnleashHell]

This is just one more reason to have a portion of your retirement savings in a Roth account (IRA or 401k).  If you have enough cost basis to cover five years worth of expenses, you can retire at 55 without as much anxiety about the tax man.  Then you can also ladder any before-tax balances into a Roth so you are filling in those lower tax brackets during those five years.

While I'm sure that's probably the complete truth as it's written (I'm not a tax professional), this response does not help us help our friend, Hellboy. Telling him he did it wrong, especially in his current circumstances, is rather heartless unhelpful, IMO.

True.  I tried to help OP in my first several posts on this thread, because I try to be helpful.

But to try to be helpful here to both of you, there may be other people who come along and read this thread who are, unlike OP, in a position to change what they do because they're earlier in their planning phase.  So having the idea may not be helpful to OP but may be helpful to others.

On that point we can agree. However, UH, aka Hellboy, has done an incredible job of pulling his shit together after his life and FIRE plans imploded several years ago. IMO, he's the last one who deserves a reprimand. He asked for help in his very specific circumstances, and received the lecture quoted above.

Fair enough.  I have this weird thing where most posters here blend into one persona, so I don't keep track of individuals and thus missed the aspect of it which you described.  @UnleashHell, my condolences for the implosion Dicey refers to, and if Dicey says you've done an incredible job then I believe Dicey and am impressed.

Does that mean all mustachians look alike? (/j)

yes they do. see my profile picture.


I didn't perceive any reprimand or slight. I've been around the interwebs long enough not to give a shit - and I don't expect people to know my circumstances.
My question was specific because thats where I am and I'm ok with that. I appreciate the answers and also those that have thrown further advice in that may assist others that have that opportunity.

[Retireatee1]

On that point we can agree. However, UH, aka Hellboy, has done an incredible job of pulling his shit together after his life and FIRE plans imploded several years ago. IMO, he's the last one who deserves a reprimand. He asked for help in his very specific circumstances, and received the lecture quoted above.

Reprimand?  Lecture?  Really?

UH did mention the possibility of returning to the workforce and funding retirement accounts anew.  Why exactly is my post not relevant or helpful?

I'm sorry about the imploded FIRE plans and any resulting sensitivity, but that meta-data was not in the OP.  I'm doing the best I can in the context available.

[EvenSteven]

On that point we can agree. However, UH, aka Hellboy, has done an incredible job of pulling his shit together after his life and FIRE plans imploded several years ago. IMO, he's the last one who deserves a reprimand. He asked for help in his very specific circumstances, and received the lecture quoted above.

Reprimand?  Lecture?  Really?

UH did mention the possibility of returning to the workforce and funding retirement accounts anew.  Why exactly is my post not relevant or helpful?

I'm sorry about the imploded FIRE plans and any resulting sensitivity, but that meta-data was not in the OP.  I'm doing the best I can in the context available.

Don't worry about it Retireatee1. That's just Dicey being Dicey.

[Dicey]

On that point we can agree. However, UH, aka Hellboy, has done an incredible job of pulling his shit together after his life and FIRE plans imploded several years ago. IMO, he's the last one who deserves a reprimand. He asked for help in his very specific circumstances, and received the lecture quoted above.

Reprimand?  Lecture?  Really?

UH did mention the possibility of returning to the workforce and funding retirement accounts anew.  Why exactly is my post not relevant or helpful?

I'm sorry about the imploded FIRE plans and any resulting sensitivity, but that meta-data was not in the OP.  I'm doing the best I can in the context available.

'Yeah, telling someone what they should have done isn't overly helpful, especially to someone so close to FIRE (again). BTW, if you want to know more about someone, just click on their screen name and "Show Posts. Tons of context there.

[mjr]

Or stop taking offence on behalf of others and doing some reprimanding of your own

[Dicey]

Or stop taking offence on behalf of others and doing some reprimanding of your own

Thank you.

[UnleashHell]

Or stop taking offence on behalf of others and doing some reprimanding of your own

Thank you.

oh @Dicey

you gonna reprimand me? thats spicy!!

I'm in quarantine right now - could be the most exciting thing that happened to me for ages...

:D

[PDXTabs]

This is basically what lhamo said, but just to make sure everyone is clear on the rule of 55... withdrawals from a workplace plan when you separated from service from the employer that sponsors the plan in or after the year you turn 55 won't incur a 10% early withdrawal penalty. That's IRS policy and nothing the employer does or says can change that. What the employer can do is restrict how withdrawals can be taken. At the very worst you can always make a full withdrawal and roll most of it over to an IRA, but keep a certain amount out to help pay expenses until you're 59.5 and can make withdrawals from the IRA without a penalty. This isn't ideal since it probably means you'll need to make a larger taxable withdrawal in that one year than you would otherwise, but at least it lets you get some money out of the 401(k) early without a penalty regardless of the employer's withdrawal rules.

This is just one more reason to have a portion of your retirement savings in a Roth account (IRA or 401k).  If you have enough cost basis to cover five years worth of expenses, you can retire at 55 without as much anxiety about the tax man.  Then you can also ladder any before-tax balances into a Roth so you are filling in those lower tax brackets during those five years.

This is slightly off topic, but you can only do the principal trick with a Roth IRA, not a Roth 401k:

Early withdrawals are prorated between nontaxable contributions and earnings. To calculate the portion of the withdrawal attributable to earnings, simply multiply the withdrawal amount by the ratio of total account earnings to account balance. If your account balance is $10,000, made up of $9,000 in contributions and $1,000 in earnings, then your earnings ratio is 0.10 ($1,000 / $10,000).

- https://www.investopedia.com/ask/answers/101314/what-are-roth-401k-withdrawal-rules.asp

[dandarc]

This is basically what lhamo said, but just to make sure everyone is clear on the rule of 55... withdrawals from a workplace plan when you separated from service from the employer that sponsors the plan in or after the year you turn 55 won't incur a 10% early withdrawal penalty. That's IRS policy and nothing the employer does or says can change that. What the employer can do is restrict how withdrawals can be taken. At the very worst you can always make a full withdrawal and roll most of it over to an IRA, but keep a certain amount out to help pay expenses until you're 59.5 and can make withdrawals from the IRA without a penalty. This isn't ideal since it probably means you'll need to make a larger taxable withdrawal in that one year than you would otherwise, but at least it lets you get some money out of the 401(k) early without a penalty regardless of the employer's withdrawal rules.

This is just one more reason to have a portion of your retirement savings in a Roth account (IRA or 401k).  If you have enough cost basis to cover five years worth of expenses, you can retire at 55 without as much anxiety about the tax man.  Then you can also ladder any before-tax balances into a Roth so you are filling in those lower tax brackets during those five years.

This is slightly off topic, but you can only do the principal trick with a Roth IRA, not a Roth 401k:

Early withdrawals are prorated between nontaxable contributions and earnings. To calculate the portion of the withdrawal attributable to earnings, simply multiply the withdrawal amount by the ratio of total account earnings to account balance. If your account balance is $10,000, made up of $9,000 in contributions and $1,000 in earnings, then your earnings ratio is 0.10 ($1,000 / $10,000).

- https://www.investopedia.com/ask/answers/101314/what-are-roth-401k-withdrawal-rules.asp

Yep - an unqualified distribution from a Roth 401K is not treated the same a withdrawal from a Roth IRA. Of course, once separated (or if your plan allows for in-service distributions), you can transfer the Roth 401K to a Roth IRA - whatever basis you have follows if you do that, and the more favorable Roth IRA withdrawal rules apply.

So if you do happen to have Roth 401K money, and you think you might want to withdraw early, then usually it is best to get those funds into a Roth IRA as soon as you're allowed to.

[terran]

So if you do happen to have Roth 401K money, and you think you might want to withdraw early, then usually it is best to get those funds into a Roth IRA as soon as you're allowed to.

Why do you say that? My understanding is that once you rollover from Roth 401(k) to Roth IRA the contributions you made to the Roth 401(k) can be withdrawn right away just like if they had been made to a Roth IRA, meaning it wouldn't matter when you did the rollover, you'd still be able to withdraw the same amount. Does that match your understanding, or do you think there's some reason it's better to get the Roth 401(k) into a Roth IRA before the point at which you want to withdraw contributions?

[dandarc]

@terran

I was really just thinking "get it done when you're thinking about it" so whenever you want to make that withdrawal you're not waiting a week or two for the transaction to clear before you can make the withdrawal of prior contributions. Plus, while some might have better employer 401k plans, I personally haven't ever had an employer plan with better investment options than I have in my IRAs - rather get the money there sooner than later. I also tend to think of "Roth IRA basis" as a part of the emergency fund in addition to the obvious use for future retirement spending. Roth IRA is further up the "if you need money right now" priority list than Roth 401K funds, largely due to the proration rules mentioned upthread.

I also have "close soloK with eTrade, transfer assets to IRAs" on my post-job-change checklist so it is on my mind lately.  I set that up 10 years ago when I had different priorities and a lot less knowledge, so I have about $12K of Roth 401K basis that can be turned into Roth IRA basis whenever I get that done.

[Retireatee1]

'Yeah, telling someone what they should have done isn't overly helpful, especially to someone so close to FIRE (again). BTW, if you want to know more about someone, just click on their screen name and "Show Posts. Tons of context there.

I don't tell individuals what to do with their money, nor do I tell them what they should have done with their money.  I may post generalized advantages or disadvantages to doing one thing or another based on facts.  So I'm afraid you are mistaken and out of line.  Maybe you should read my posts (including the ones in this thread).

[terran]

@dandarc all of you points make sense and are great reasons to move Roth 401(k) over to Roth IRA even if there's no difference in how the contributions are treated, as we seem to agree.

[UnleashHell]

'Yeah, telling someone what they should have done isn't overly helpful, especially to someone so close to FIRE (again). BTW, if you want to know more about someone, just click on their screen name and "Show Posts. Tons of context there.

I don't tell individuals what to do with their money, nor do I tell them what they should have done with their money.  I may post generalized advantages or disadvantages to doing one thing or another based on facts.  So I'm afraid you are mistaken and out of line.  Maybe you should read my posts (including the ones in this thread).

It did come across as a little specific to me - mostly as it was on the thread I started. There been no ladder due to being in a higher tax bracket as I dealt with divorce, multiple mortgages (on the property that ended up with the ex as well as my own), child support, alimony and trying to get everything else in line.
Whilst your thoughts are good in general they just didn't apply to my situation as there wasn't the chance to get it done. I was trying to work into next year to avoid the 10% penalty but my refusal to take shit at work ended with me getting a severance instead. I'm still FIRE (which wasn't looking possible a couple of years ago) - but obviously it wasn't optimal.
Optimization is great in theory but its not one size fits all. Dicey spoke out because she's aware of my specific situation and I thank her for that but I didn't lay out the gory details in this thread as it deals with where I am right now - not what I should have done in a perfect world.