Greetings, Wisefool2, and welcome. You asked:I am interested in better understanding the process for making a withdrawal prior to age 59 1/2 without incurring the 10% penalty by setting up a constant annual withdrawal stream. Can anyone enlighten me on how this process works and is it irreversible? (ie- once you establish it that's it!). Also, what happens if your portfolio appreciates more than what you established the annual payment stream at? How much flexibility is there in this process?>>You are referring to withdrawals under Section 72(t) of the Infernal (sic) Revenue Code. There are three permissible methods. Once started, you cannot change the method in use and you must use that method for the longer of five years or until you reach age 59 1/2. A gain in your portfolio while using the method has an impact only in the life expectancy method of withdrawal, which is recalculated each year. It has no impact on the other two methods, which are fixed starting in the first year of withdrawal.For an explanation of the methods, see the post on this board at http://boards.fool.com/Registered/Message.asp?id=1040013000805003&sort=postdateRegards…..Pixy
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