Join Early Retirement Today
Thread Tools Search this Thread Display Modes
Old 03-08-2020, 07:03 AM   #21
Full time employment: Posting here.
Join Date: Feb 2007
Posts: 690
Originally Posted by mrWinter View Post
Perhaps worth putting greater emphasis on: ROTH contributions can be withdrawn early, not earnings.

So to summarize there are four main options (feel free anyone to add more) for pulling money from retirement accounts prior to 59.5:
  • rule of 55 (can withdrawal from company plan if you retire from that same company the year you turn 55 or later)
  • withdrawal any Roth contributions, but not earnings
  • 72T SEPP (substantially equal periodic payments)
  • withdrawal without any of the above and eat a 10% penalty

Possibly worth nothing depending on your age, if you run some numbers you may see that it's possibly better to invest in 401k for a long time and eat the 10% penalty than it is to invest after tax. The two competing values are the capitol gains tax on earnings which you pay in the after tax account vs. 10% tax on entirety of withdrawal. After a long enough period the earnings may be big enough compared to contributions that 10% of total is less than 15% (or more depending on bracket) of earnings. It's also possible that capital gains will be taxed at higher rates in the future (perhaps as normal income), but who knows I guess.

Just one issue some people might find themselves in... like I do.

If you have a ROTH 401k. When you turn 55 (assuming you are retiring then) you must first roll over your ROTH 401k to a ROTH IRA, before you attempt to withdraw your personal contributions.
From a ROTH 401k (rule of 55), you will get taxed some amount on the growth. They will not let you just take out your own personal contributions. Once that money gets to a ROTH IRA, you can take out just your personal contributions first with no tax or penalties at all.
Provided you have enough personal contributions to make it to 59.5, at that time the entire ROTH IRA is tax and penalty free.

This is what I am intending to do...
armor99 is offline   Reply With Quote
Join the #1 Early Retirement and Financial Independence Forum Today - It's Totally Free!

Are you planning to be financially independent as early as possible so you can live life on your own terms? Discuss successful investing strategies, asset allocation models, tax strategies and other related topics in our online forum community. Our members range from young folks just starting their journey to financial independence, military retirees and even multimillionaires. No matter where you fit in you'll find that is a great community to join. Best of all it's totally FREE!

You are currently viewing our boards as a guest so you have limited access to our community. Please take the time to register and you will gain a lot of great new features including; the ability to participate in discussions, network with our members, see fewer ads, upload photographs, create a retirement blog, send private messages and so much, much more!


retirement contribution

Currently Active Users Viewing This Thread: 1 (0 members and 1 guests)
Thread Tools Search this Thread
Search this Thread:

Advanced Search
Display Modes

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is On
HTML code is Off
Trackbacks are Off
Pingbacks are Off
Refbacks are Off

Similar Threads
Thread Thread Starter Forum Replies Last Post
Use of Retirement and Non-Retirement Accounts ZMAN FIRE and Money 6 10-02-2007 05:45 PM
Retirement Accounts and Early Retirement heebygeeby Young Dreamers 9 03-14-2007 03:56 PM
Retirement accounts for students/unemployed? hypochondriac Young Dreamers 8 02-22-2007 02:25 PM
Retirement savings accounts for freelancers Lusitan Young Dreamers 3 10-19-2006 04:10 PM
Optimal retirement accounts for self-employed? dancalio Young Dreamers 1 11-16-2004 05:44 AM

» Quick Links

All times are GMT -6. The time now is 07:10 PM.
Powered by vBulletin® Version 3.8.8 Beta 1
Copyright ©2000 - 2021, vBulletin Solutions, Inc.