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11-26-2015, 12:15 PM
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#1
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Dryer sheet wannabe
Join Date: Nov 2015
Posts: 11
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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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11-26-2015, 12:44 PM
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#2
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Full time employment: Posting here.
Join Date: Nov 2009
Posts: 592
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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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11-26-2015, 03:03 PM
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#3
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Dryer sheet wannabe
Join Date: Nov 2015
Posts: 11
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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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11-26-2015, 05:14 PM
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#4
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Thinks s/he gets paid by the post
Join Date: Feb 2006
Posts: 4,872
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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.
__________________
“So we beat on, boats against the current, borne back ceaselessly into the past.”
Current AA: 75% Equity Funds / 15% Bonds / 5% Stable Value /2% Cash / 3% TIAA Traditional
Retired Mar 2014 at age 52, target WR: 0.0%,
Income from pension and rent
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11-26-2015, 05:37 PM
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#5
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Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
Join Date: Nov 2010
Location: Sarasota, FL & Vermont
Posts: 36,370
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 Quote:
Originally Posted by xretro
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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Why do you want to use money in your IRA first? Money is fungible. It shouldn't matter.
__________________
If something cannot endure laughter.... it cannot endure.
Patience is the art of concealing your impatience.
Slow and steady wins the race.
Retired Jan 2012 at age 56
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11-26-2015, 06:35 PM
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#6
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Thinks s/he gets paid by the post
Join Date: Nov 2013
Location: Twin Cities
Posts: 3,941
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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?
Sent from my iPad using Early Retirement Forum
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11-26-2015, 06:44 PM
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#7
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Dryer sheet wannabe
Join Date: Nov 2015
Posts: 11
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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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11-26-2015, 09:17 PM
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#8
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Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
Join Date: Nov 2010
Location: Sarasota, FL & Vermont
Posts: 36,370
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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.
__________________
If something cannot endure laughter.... it cannot endure.
Patience is the art of concealing your impatience.
Slow and steady wins the race.
Retired Jan 2012 at age 56
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11-26-2015, 10:00 PM
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#9
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Thinks s/he gets paid by the post
Join Date: Feb 2006
Posts: 4,872
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How much of your income needs will your wife's annuity cover? Is you annuity a good deal?
__________________
“So we beat on, boats against the current, borne back ceaselessly into the past.”
Current AA: 75% Equity Funds / 15% Bonds / 5% Stable Value /2% Cash / 3% TIAA Traditional
Retired Mar 2014 at age 52, target WR: 0.0%,
Income from pension and rent
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11-26-2015, 10:04 PM
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#10
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Full time employment: Posting here.
Join Date: Apr 2014
Location: Houston
Posts: 958
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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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12-01-2015, 04:53 PM
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#11
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Full time employment: Posting here.
Join Date: Apr 2015
Posts: 903
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Quote:
Originally Posted by Whisper66
(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.
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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.
Quote:
Originally Posted by Whisper66
(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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I thought NUA only applied to stock options?
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12-02-2015, 06:04 AM
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#12
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Recycles dryer sheets
Join Date: May 2015
Location: Houston
Posts: 337
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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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12-02-2015, 08:06 AM
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#13
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Full time employment: Posting here.
Join Date: Apr 2015
Posts: 903
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Quote:
Originally Posted by Slow But Steady
My understanding is that NUA applies to shares of your employer held in a 401K.
I wasn't aware it applied to options.
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Yes, I was referring to employee stock options/employee stock ownership plans (ESOP) so shares of company/employer stock.
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