Rollover and 72t

[bow-tie]

I gave the search a shot but I'm having trouble putting together an answer to my quandry.

I just switched gigs and want to roll my old company 401k to Vanguard. I already have a rollover there. Regarding 72t distributions, which I may employ sometime in the future, how do they get applied to rollovers? I thought I remember reading something here in the past outlining how if you roll a 401k over to and IRA, you should break it up into chunks.

Example - 500k 401k - when rolling it over to an IRA, break the 500k up into 100k chunks (or something along those lines), so you can 72t against each respective 100k IRA(s), versus the entire 500k, thereby giving you more flexiblity.

Does that make sense? Or did I dream this up somewhere?

I'd like to figure this out before I do anything that might hamstring me in the futue if/when I ever get to FIRE, and I'm younger than 59.5.

Any help/insight would be appreciated.

 

[crazy connie]

Chunk It Up

I responded earlier but post apparently got lost

Right now roll-over and invest. If & when you decide you want or need to do a 72T, you can chunk it to meet needs and keep some on the side for unexpected needs.

That is what I did with a pension roll-over to IRA. My safety net back-up is a 401k which is still with employer (but I hope to roll-over this year). I took the max on the 72T but it was still about the SWR of 4% of the total. If I need to later I have the option of starting 72T on another chunk or two.

Also, do some reading here 72(t) on the Net Discussion Forum

 

[bow-tie]

Thanks Connie

 

[limpid lizard]

Age plays into this. If you are 55 or older when you leave an employer you may draw against your 401K without penalty or 72t. What I did: I left enough in my employer's 401K plan to fund about 5 years. I draw off of it.

I rolled the rest of the 401k into an IRA at Vanguard. I have another rollover IRA and a Roth there also. If I get into a bind on the remainder of the 401K, I can do a 72t against the smaller of the IRA's to get me to 59 1/2.