pre 55 and pre 59 1/2 cash withdraw options???

[Luck_Club]

So I'm faced with another dilemma on how best to approach cash short falls before free access at 59.5.

I have a 401K with about $150K from a company I am closing, and need to move it. I don't anticipate needing the money, but it is to better plan as if you need it and not use it than to find out you need it and not have it. I also have another company that in theory might allow me to open up a 401K and roll it into that 401K.

After speaking with Fidelity who also holds an IRA & Keogh for me, they tell me I can't open a 401K rollover, which would give me access at 55. However, they say that I can utilize a 72T periodic distribution from my IRA, which allows me to set up a periodic payment, but it must last a minimum of 5 years or to 59.5 whichever is longer.

The two time frames when I feel I may need access to funds would be from now until January 2020 when an annuity kicks in, or less likely 60 months later when the annuity ends until I reach 59 1/2 which will be roughly June 2027. So basically 24 months and 24 months respectively.

Since I'm still working and don't plan a full retirement until the annuity starts, this is hypothetical dooms day scenario for which I'd like to properly plan just in case I'm RE before the FI part comes in.

How have others bridged the gap and given relatively short gaps is it worth the aggravation of jumping through the hoops to capture the 55 access given the short duration of potential cash needs? For arguments sake lets say it is only $30K per year during the gap periods before and after the annuity.

 

[Blue Collar Guy]

Borrow the money from family, when you hit 59.5 pay them back

 

[Fedup]

I have a HELOC for that very purpose. But I have cash also outside of my taxable account.

 

[zinger1457]

I doubt using the 72t option on a $150K 401K/IRA would work to give you the money you need to cover the two short periods. Check out one of the online 72t calculators. Based on today's interest rates the most you could pull out using the 72t option is ~$6-7K/year and as you know once it's started you can't just stop it when it's no longer needed.

 

[MRG]

Can you leave it where its at(401k) and do withdrawals after 55 and separated from service?

 

[48Fire]

I did the 72t, and it's worked great so far.

 

[pb4uski]

We had substantial taxable account savings (43% of our nestegg when we tired) which we lived off from ER at 56 to now (61) and the forseeable future (currently 25% of our nestegg).

 

[Koolau]

Don't know the rest of your situation, but I'm guessing you've got other options. Mentioned already are Heloc or personal (family) loan - heh, heh, do those before you ER. Do you have any Roths? I'd hate to get into them myself, but you can take out what you put in without penalty - just can't take the gains without penalty. Or just downsize! I'd do that before wrecking my hard fought for "plan."

In your time frame, I'm guessing you can figure out ways to stockpile some cash. I think MY back up to my back ups would be to be willing to pull "some" out of IRAs or 401(k)s and pay the penalty. THAT motivation would likely keep you from actually doing it unless it were REALLY, REALLY necessary. Of course, there'a always OMY! Naturally YMMV.

 

[Scuba]

We had substantial taxable account savings (43% of our nestegg when we tired) which we lived off from ER at 56 to now (61) and the forseeable future (currently 25% of our nestegg).

+1
Supplemented with a HELOC and a 0% credit card

 

[Luck_Club]

Don't know the rest of your situation, but I'm guessing you've got other options. Mentioned already are Heloc or personal (family) loan - heh, heh, do those before you ER. Do you have any Roths? I'd hate to get into them myself, but you can take out what you put in without penalty - just can't take the gains without penalty. Or just downsize! I'd do that before wrecking my hard fought for "plan."

In your time frame, I'm guessing you can figure out ways to stockpile some cash. I think MY back up to my back ups would be to be willing to pull "some" out of IRAs or 401(k)s and pay the penalty. THAT motivation would likely keep you from actually doing it unless it were REALLY, REALLY necessary. Of course, there'a always OMY! Naturally YMMV.

There are Roths & other Tax differed accounts, along with the HELOC. This is just another back up to the back up, so I won't have to break into my tooth fairy money. From the sounds of it the 72T is a terrible idea given the short duration and amounts.

I'll look to find another 401K plan to roll into so I have access in the 2 year potential shortage before hitting 59.5, then I;ll use the HELOC if anything happens before I'm ready.

 

[OddGuy]

For reference, I just started a 72t program (I'm 50) from a 401k with $325k value. Annual cash withdraw after prepaying 26% federal and state taxes is around $10k.