Botched article on 401k

[Gumby]

This CNBC article is so wrong, it would have been better not to write it at all. This is the lead sentence:

Quote:

As baby boomers hit the critical age of 70 ½, they will start taking from their 401(k) retirement money for the first time.

The First Baby Boomers Are About to Withdraw From Their 401(k)



With stuff like this, it's no wonder many people are confused about retirement planning.


Edit to add link (Hat tip to Nun)

[nun]

Quote:

Originally Posted by Gumby This CNBC article is so wrong, it would have been better not to write it at all. This is the lead sentence: With stuff like this, it's no wonder many people are confused about retirement planning.

Link?

[MichaelB]

This looks like the article The First Baby Boomers Are About to Withdraw From Their 401(k)
As I recall, age 70.5 is when RMD withdrawals are mandatory, but retirement account holders can (and probably do) begin to withdraw at a much earlier age.

[NW-Bound]

They talk about RMD at 70-1/2, then mention section 72(t) for early withdrawal, but nothing about withdrawal at 59-1/2, or 55 for certain situations.

I guess these reporters and writers are too young to know about these things to write about them.

[Chuckanut]

I can count on the fingers of one hand the number of people I know who delayed 401K withdrawals to 70 1/2. I doubt if I would need two hands if I added in those people (not including this illustrious group) who delayed SS to 70.

[Big_Hitter]

Quote:

Originally Posted by Chuckanut I can count on the fingers of one hand the number of people I know who delayed 401K withdrawals to 70 1/2. I doubt if I would need two hands if I added in those people (not including this illustrious group) who delayed SS to 70.

my dad and FIL delayed until 70.5

[Chuckanut]

Quote:

Originally Posted by Big_Hitter my dad and FIL delayed until 70.5

Did I mention I was born with seven fingers on each hand?

I obviously did not know them, but they sound like my kind of people.

[Big_Hitter]

Quote:

Originally Posted by Chuckanut Did I mention I was born with seven fingers on each hand? I obviously did not know them, but they sound like my kind of people.

My dad retired at 64 and Lew worked until 65

[tn3sport]

Doesn't surprise me that this article is so off-base and what appears to be a continued campaign from the millennials to attack the baby boomers for all of today's problems.
I'm ever vigilant in who writes the articles as it seems just about anything can get posted online, even by mainstream sources these days. In this case, CNBC.
Im sure as most of you have discovered, you've got to be a skeptic first on anything you read online.
As soon as I saw that the 30 year old writer was married to the senior editor of the Huffington Post, I discounted the authenticity and accuracy of the article. Not political issue. Its accuracy in reporting and choice of content that I take issue with at the HuffPo.

[LOL!]

Wow, just totally bad information in the article.

One cannot do 72T from a 401(k). That's only for IRAs, so folks must do a rollover to an IRA first.

And we all know that many (not all) 401(k)s allow for penalty-free withdrawal at age 55 if one separates from service at that time.

Plus the penalty-free withdrawals when one has reached age 59.5.

Why am I even writing this? Many people already know this. So why does a so-called journalist with a pedigree like Jo Ling Kent not know this? I predict this article will disappear pretty soon without any correction. I guess the corporate fact checkers are all tied up in another area.

[Major Tom]

A standard fluff-piece on retirement, written by someone who knows very little about the subject. I imagine she wasn't paid much for this piece, so it wouldn't have been worth her time to research the subject thoroughly.

The nice thing about the internet is that there are many people who have much more in-depth knowledge to share on a wide variety of subjects, who do it for very little, or for free, through blogs and internet forums like this. Even though the article was short, I take my hat off to everyone who took the time to read and critique it. I found myself nodding off after the first few lines

Even that stock photo of the 401(k) statement was mildly annoying but then, I'm on the fast track to full-fledged curmudgeonliness

[RockLife]

I get that there are plenty of idiots writing articles on the Net, but when it comes to financial articles I believe they have a responsibility to know "something" about the subject and not just fill the page with blatant errors. Some of this stuff is pretty complicated and people don't need to be filled with misinformation because some writer is uninformed and lazy. Sorry, I grew up in a household with a highly skilled journalist (Father), so I have little patience for fools in this arena.

[nun]

Quote:

Originally Posted by Big_Hitter my dad and FIL delayed until 70.5

I'm 55 and retired and have no plan to make withdrawals from my tax deferred accounts, other than ROTH rollovers, until the IRS make me do it at 70.5


Sent from my iPhone using Early Retirement Forum

[Dog]

I agree with you Rocklife. It's not surprising that people don't trust the media when they don't verify facts or do due diligence on their articles. Lazy and dangerous.

[2k6_TX_Dad]

Quote:

Originally Posted by LOL! One cannot do 72T from a 401(k). That's only for IRAs, so folks must do a rollover to an IRA first.

I don't think this is correct.
But I may be a victim off bad information myself.
I'm going to see what I can find, but if anyone has a link to a (trusted) source that states a 72T can only be done from an IRA?
I think it's the other way around.

Going hunting for information..

Here's what I found.
On irs.gov
I see:
Equal Payments - 72(t)(2)(A)(iv) - Good for both 401() and IRA
Separation from Service - 72(t)(2)(A)(v) - Good only for 401()

This site explains that 72(t)(2)(A)(iv) is the Series of Substantially Equal Periodic Payments (SOSEPP) and 72(t)(2)(A)(v) is you can take withdrawals (not subject to SOSEPP? That would be sweet)

Anyone have different information?

[jazz4cash]

I seem to recall that it is highly advantageous to isolate 72t funds in their own IRA and I'd need to dig into the rational which I won't do as I'm not a candidate and someone more knowledgeable will reply in a moment.

[exnavynuke]

The "reporter" who wrote the story couldn't even manage to properly use the English language which is, apparently, their job. It doesn't surprise me they couldn't manage to discuss 401k plans worth a dang either...

[harley]

I did notice that they don't have a comments section, so it's unlikely the author will ever know (or care) how much bad information they are putting out. It's certainly not very good training for becoming an actual journalist, as opposed to whatever this was.

[Yarnstormer]

The millennials at my office used their 401ks regularly as a line of credit. Sad.

[jazz4cash]

I had plenty of boomer colleagues that abused the plan too