401k Contribution question

laurinsane · 01-22-2008, 08:40 AM

So if one is planning on retiring early when should they stop paying into 401k. It is my understanding that you can't take from 401 until your 65 without taking a large tax hit. So if one were planning on retiring at age 50. That's 15 years before you can touch your 401k. So would you suggest slowly declining 401k contribution in the last 5 years and allocating the money into other funds, such as bonds and stock indexes, which you can access more easily? Thanks.

**REWahoo** · 01-22-2008, 08:47 AM

I'd advise you to continue to contribute to your 401(k) until the day you retire. Especially if you have an employer match - closest thing to free money most of us ever see.

There are a couple of ways to begin tapping your 401(k)/IRA money prior to age 59.5 without penalty. See this website for more information on one option: About 72t on the Net

Retire Soon · 01-22-2008, 09:21 AM

You may also tap your 401K at the age of 55 with no restrictions if you retire.

TeeRuh · 01-22-2008, 09:22 AM

You should check with your company admin. If you retire at 55 you can typically take from 401K w/o penalty.

TeeRuh · 01-22-2008, 09:23 AM

woops; sorry R S.

jIMOh · 01-22-2008, 12:10 PM

It depends. if you could max 401k, Roth IRA, and invest in a taxable account, that is the best of all worlds. Roth 401k would be even better.

I put 11% into my 401k now (age 34) and the match is only on the first 6%.

I do plan on ramping down 401k to create a taxable account closer to retirement. Always invest up to the match, though.

jazz4cash · 01-22-2008, 12:27 PM

Quote:

Originally Posted by Retire Soon

You may also tap your 401K at the age of 55 with no restrictions if you retire.

I think you just have to be seperated, not fully retired............so if you had changed employers, you could tap the 401k from the former employer.

crazy connie · 01-22-2008, 12:49 PM

You can tap 401k at 55 if you sever employment per the IRS but your employer SPD needs to be studied. You can roll to an IRA anytime you are no longer employed there. You can do a SEPP under 72T of IRS code at any age. Never walk away from free money in a 401k match. Study on the website Welcome to 72t on the Net to learn about the ins & outs of getting access to your funds before age 59 & 1/2.

01-22-2008, 08:40 AM	#1
laurinsane Dryer sheet aficionado Join Date: Jan 2008 Posts: 32	401k Contribution question So if one is planning on retiring early when should they stop paying into 401k. It is my understanding that you can't take from 401 until your 65 without taking a large tax hit. So if one were planning on retiring at age 50. That's 15 years before you can touch your 401k. So would you suggest slowly declining 401k contribution in the last 5 years and allocating the money into other funds, such as bonds and stock indexes, which you can access more easily? Thanks.

01-22-2008, 08:47 AM	#2
REWahoo Administrator Join Date: Jun 2002 Location: Texas Hill Country Posts: 11,613	I'd advise you to continue to contribute to your 401(k) until the day you retire. Especially if you have an employer match - closest thing to free money most of us ever see. There are a couple of ways to begin tapping your 401(k)/IRA money prior to age 59.5 without penalty. See this website for more information on one option: About 72t on the Net __________________ [Closed for renovation]

01-22-2008, 09:22 AM	#4
TeeRuh Recycles dryer sheets Join Date: Oct 2007 Posts: 131	You should check with your company admin. If you retire at 55 you can typically take from 401K w/o penalty. __________________ Marge: Homer, the plant called. They said if you don't show up tomorrow don't bother showing up on Monday. Homer: Woo-hoo. Four-day weekend.

01-22-2008, 09:23 AM	#5
TeeRuh Recycles dryer sheets Join Date: Oct 2007 Posts: 131	woops; sorry R S. __________________ Marge: Homer, the plant called. They said if you don't show up tomorrow don't bother showing up on Monday. Homer: Woo-hoo. Four-day weekend.

01-22-2008, 12:10 PM	#6
jIMOh Thinks s/he gets paid by the post Join Date: Apr 2007 Location: Milford, OH Posts: 1,208	It depends. if you could max 401k, Roth IRA, and invest in a taxable account, that is the best of all worlds. Roth 401k would be even better. I put 11% into my 401k now (age 34) and the match is only on the first 6%. I do plan on ramping down 401k to create a taxable account closer to retirement. Always invest up to the match, though. __________________ Light travels faster than sound. That is why some people appear bright until you hear them speak. One person's stupidity is another person's job security.

01-22-2008, 09:21 AM	#3
Retire Soon Full time employment: Posting here. Join Date: Nov 2005 Posts: 535	You may also tap your 401K at the age of 55 with no restrictions if you retire.

01-22-2008, 12:49 PM	#8
crazy connie Full time employment: Posting here. Join Date: Feb 2006 Posts: 711	You can tap 401k at 55 if you sever employment per the IRS but your employer SPD needs to be studied. You can roll to an IRA anytime you are no longer employed there. You can do a SEPP under 72T of IRS code at any age. Never walk away from free money in a 401k match. Study on the website Welcome to 72t on the Net to learn about the ins & outs of getting access to your funds before age 59 & 1/2.

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