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Author: TMFPixy Big gold star, 5000 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 75384  
Subject: Re: Early Retirement and Roth Date: 2/11/1998 4:44 PM
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Greetings, Uniquename, and welcome.

<<I'm planning on an early retirement at 55 in about 20 years. With a regular IRA, I could start deductions before 59 1/2 as long as they are substantial and equal. I believe the Roth IRA taxes deductions taken before 59 1/2. Is this true for early retirees also or is there a loophole similar to the regular IRA?>>

I think you mean you can start taking withdrawals prior to age 59 ½, not deductions. The substantial and equal payments from a traditional IRA only allow you to escape the early withdrawal penalty of 10%, not taxes. In the Roth, you may take contributions at any time without worry of taxes or penalty. It's the earnings you can't withdraw prior to 59 ½. If you do, you'll be taxed and penalized. The substantial and equal withdrawals will apply to Roth earnings taken prior to age 59 ½ as well, assuming you need them because you've already withdrawn all your contributions. If that happens, though, you probably shouldn't be retired because you don't have enough money to live on anyway.

Regards……Pixy

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