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Old 11-26-2015, 01:15 PM   #1
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lump sum

Ok, i,m going to retire next year and i want to take a lump sum instead of and annuity but if i roll it into a ira won,t i have to wait untill i,m 59.5 to start withdrawals?
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Old 11-26-2015, 01:44 PM   #2
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There is an option for penalty free IRA withdrawals before 59 1/2 called a 72T. Here's link with a calculator/info on it.

https://www.calcxml.com/calculators/72t
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Old 11-26-2015, 04:03 PM   #3
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Yeah, i know about the 72t rule but it sounds like a lot of work, i know i can get money from my 401k since i,m57 but i want to use the money in my retirement
first.
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Old 11-26-2015, 06:14 PM   #4
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It's best to leave tax deferred money to grow tax free for as long as you can. If you are desperate for the money before 59.5 I question whether you are ready to retire early.
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Old 11-26-2015, 06:37 PM   #5
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Yeah, i know about the 72t rule but it sounds like a lot of work, i know i can get money from my 401k since i,m57 but i want to use the money in my retirement
first.
Why do you want to use money in your IRA first? Money is fungible. It shouldn't matter.
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Old 11-26-2015, 07:35 PM   #6
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Some 401Ks let you start withdrawals at age 55 or later if you are separated from service. Have you explored that with yours?


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Old 11-26-2015, 07:44 PM   #7
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It does,nt matter just the lump sum is less than what i have in 401k and i was hoping to leave that alone and let it grow for a while. i can take an annuity instead of a lump sum, but my wife is going to take a annuity from work and i wanted to take a lump sum.
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Old 11-26-2015, 10:17 PM   #8
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So if you tap into the 401k instead then the IRA will grow. Same difference. You're getting too wrapped up in your underwear about this.
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Old 11-26-2015, 11:00 PM   #9
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How much of your income needs will your wife's annuity cover? Is you annuity a good deal?
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Old 11-26-2015, 11:04 PM   #10
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Couple things to consider:

(1) Once you retire after 55 yrs old (even before 59.5), can convert funds from IRA to a ROTH IRA if you are willing to pay the taxes on the converted funds. Then can use the ROTH funds (but not the earnings gained while within the ROTH account) as you wish without penalty.

(2) If you pull from your 401k account, make sure you understand the Net Unrealized Appreciation rules. Check if they apply to your 401k. If they do, you will need to be careful about how you withdraw from the 401k to ensure you still get the tax advantages of the NUA rules if you wish to take them.
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Old 12-01-2015, 05:53 PM   #11
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(1) Once you retire after 55 yrs old (even before 59.5), can convert funds from IRA to a ROTH IRA if you are willing to pay the taxes on the converted funds. Then can use the ROTH funds (but not the earnings gained while within the ROTH account) as you wish without penalty.
Heck, you can do that even in your 30s. There's no penalty on conversions. You just need to use other non-IRA/401k money to pay taxes.

If you leave the company at age 55 or older, there's no IRS penalty on 401k withdrawals.

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(2) If you pull from your 401k account, make sure you understand the Net Unrealized Appreciation rules. Check if they apply to your 401k. If they do, you will need to be careful about how you withdraw from the 401k to ensure you still get the tax advantages of the NUA rules if you wish to take them.
I thought NUA only applied to stock options?
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Old 12-02-2015, 07:04 AM   #12
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My understanding is that NUA applies to shares of your employer held in a 401K. That means I don't have to worry about it, because my 401K has no shares of my employer. My wife has to think about it, though, because she holds a bunch of shares bought over a 30 year period.

I believe that taking advantage of the NUA rules requires a total withdrawal of everything in the 401K. I wasn't aware it applied to options. In any case, it is, in my opinion, important to understand the rules and how they apply to the situation at hand.
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Old 12-02-2015, 09:06 AM   #13
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My understanding is that NUA applies to shares of your employer held in a 401K.

I wasn't aware it applied to options.
Yes, I was referring to employee stock options/employee stock ownership plans (ESOP) so shares of company/employer stock.
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