(another way to) Access Retirement Money BEFORE 59–1/2 to Fund Your Tax-free Retirement

(don’t forget to checkout the video too)

For people seeking an early retirement finding sources of income that aren’t penalized, can be a bit of a problem.

In a recent video, I talked about a 72t which is an interesting (and useful) little trick buried in the IRS tax code that allows for early withdrawals from retirement accounts…

With a 72t you can take money out 401k’s, IRA’s, 403b’s early, WITHOUT the 10% penalty! 😏

But, there is one stipulation that you might not like (or need)…

It’s that once you start a 72t you have to continue to take distributions (NO MATTER WHAT) until you hit 59–1/2 or until 5 years have passed…

Whichever is LONGER‼️

So what if you just need additional income for a couple of years to bridge the gap to retirement⁉️

This is where the Age 55 Rule comes into play (now these are subject to a 20% withholding, but they were going to be taxable anyways, so it’s not the end of the world).

The Age 55 Rule allows you to pull money out of 401k’s, 403b’s, TSP’s, and other qualified retirement plans early (sorry, not IRA’s), to bridge the gap until the rest of your money is available penalty-free.

So if you’re 57 and need 2–1/2 years worth of income before you start taking retirement money, this can be a good option.

This can also be part of a tax-free retirement strategy where you spend down some of your taxable assets in the same manner as a Roth conversion, so that you can collect social security tax-free in retirement, along with your other retirement income.

Let’s chat 💬😎