401k

[early_out]

I am new to the website and I want to know what restrictions you have on 401k withdrawls after you retire. I am 57 years old and I have about 500k in a company managed 401k and I want to move it out to a self directed savings/income type of investments.

 

[wzd]

Take a look at http://www.retireearlyhomepage.com/wdraw59.html

If you have retired after age 55, then I think you can take withdrawals from the 401k.  Your options for withdrawals are to take withdrawals from the 401k or to roll it over to an IRA and take withdrawals from it.  There are advantages and disadvantages to each way.  

Personally, I rolled the pre tax portion of mine over to an IRA, and the after tax portion to an after tax account.  I am 50, so the age 55 withdrawal from a 401k was not an option.  And I find 'forever' type paperwork and tracking a real nuisance, so I seperated the pre and after tax portions.  Now I live on the after tax portion, with a small annual SEPP withdrawal to move money from the IRA to after tax.   The withdrawal was sized to keep me near the top of the tax bracket, without going into the next one.  That decision was based on analyzing output from ORP and seeing what it was recommending (i-orp.com)


Wayne

(edited by admin to fix typo in URL)

 

[John Galt]

Hello Wayne! Re. "forever type paperwork" I go to great lengths to avoid this myself. For example, when I need
to take money out of my little holding company, I always
take it as dividends. Why? Because this causes me the minimum of paperwork. There may be some more financially
beneficial ways to extract the money. I don't care
because I want to avoid hassle. I am quite hassle-averse
and becoming more so all the time. Active
proponent of the KISS system.

John Galt

 

[renferme]

early_out, yes you can withdraw from a 401k with no penalties if you retire after age 55. I verified that with my company, Vanguard, and even the IRS.

 

[wzd]

Just to highlight one point in the above

you can withdraw from a 401k with no penalties if you retire after age 55

Retire after age 55 is very much key here. The early withdrawals after age 55 only apply if you retire after 55. If you retire at age 54 or earlier, you cannot start withdrawals at age 55.

Since earlyout was 57, I didn't highlight that earlier; I'm just adding it now for other readers.

Wayne

 

[Joe Woody]

Just to put a fine point on it, withdrawals from a 401k can be taken without penalty if one retires during or after the calendar year in which they turn 55. Won't make a difference to many people but for the odd case when one retires prior to their birthday in the calendar year they turn 55 it would be important to know.

Joe

 

[early-out]

Thanks to all for the info. 90 days and counting!!! Early- out