Withdrawing from IRAs, 401k

[thechoson]

Isn't the minimum age to withdraw from these retirement accounts 59.5 or something like that? So if one was to retire early, say like at 45, you would have to wait all that time to start taking money out without penalty? Or would there be a way around that for early retirees?

Thanks!

 

[cute fuzzy bunny]

Theres an IRS statute that allows early withdrawal from retirement accounts. I forget the name. You have to divide the account up into equal annual withdrawals and then stick with that schedule. Theres something in the FAQ about it.

 

[thechoson]

oh ok, thanks, i'll look that up.

I know also Roths offer other exceptions right? Catastrophic medical bills, 1st home purchase, i think. Also, can't you deduct your contributions from the Roth at any time? IT's just your gains that would be penalized and taxed?

 

[cute fuzzy bunny]

I think those situations are true of all retirement accounts.

You can always take a distribution and pay any applicable taxes and penalties. For dire circumstances, the penalties are sometimes waived.

 

[Patrick]

Theres an IRS statute that allows early withdrawal from retirement accounts.  I forget the name.  You have to divide the account up into equal annual withdrawals and then stick with that schedule. Theres something in the FAQ about it.

I think it's called SEPP, Substantially Equal Periodic Payments.

Patrick

 

[cute fuzzy bunny]

Thats the one

http://www.investopedia.com/articles/retirement/02/112602.asp

 

[Austin_Explorer]

And note that even though SEPP's are not allowed on a 401k, there's no reason you can't roll over the 401k into an IRA and then do the SEPP. This realization completely changed my ER thinking.

 

[thechoson]

And note that even though SEPP's are not allowed on a 401k, there's no reason you can't roll over the 401k into an IRA and then do the SEPP.  This realization completely changed my ER thinking.

yea, that is a good point

 

[laurence]

It's certianly my road map! 72(t) rule! I'm hoping to start saving in after tax accounts in a couple of years along with the Roth and 401(k) maxing. I'd like to hedge my bets on future tax rates as much as possible, since current rates are so low.

 

[Mr._johngalt]

Yeah, back in 1993 I studied it from every angle
(early withdrawal from IRA). I was sure I would have to do it. Twelve years later and I haven't touched it yet.
Now at age 60, I can take it whenever. It's become
a sort of challenge to see how long I can go.

JG