UnThreaded | Threaded | Whole Thread (12) | Ignore Thread Prev | Next
Author: ptheland Big gold star, 5000 posts Feste Award Nominee! Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 76406  
Subject: Re: confused about early retirement and withdraw Date: 1/10/2004 7:33 PM
Post New | Post Reply | Reply Later | Create Poll Report this Post | Recommend it!
Recommendations: 1
Let me summarize the prior answers.

Your mother is correct. There is a penalty if you tap your IRA or 401k before you reach 59 1/2. You can avoid that penalty by taking what are called Substantially Equal Periodic Payments (SEPPs). These payments are exactly that - the same amount each year (with some minor variation allowed). They must contine until you are 59 1/2 or for at least 5 years if longer.

Because these payments are going to be the same from the time you retire until you're 59 1/2, I'd highly recommend having some significant amount set aside in a taxable account to allow you to take more or less out of that as you need in retirement.

If all of your money is in IRAs, and you retire at 40, then you would have to be taking SEPPs for 20 years. That's a long time to be on a fixed income with little flexibility.

Post New | Post Reply | Reply Later | Create Poll Report this Post | Recommend it!
Print the post  
UnThreaded | Threaded | Whole Thread (12) | Ignore Thread Prev | Next


The Retire Early Home Page
Discussion on accelerating retirement day.
Foolanthropy 2014!
By working with young, first-time moms, Nurse-Family Partnership is able to truly change lives – for generations to come.
When Life Gives You Lemons
We all have had hardships and made poor decisions. The important thing is how we respond and grow. Read the story of a Fool who started from nothing, and looks to gain everything.
Post of the Day:
Macro Economics

The Story Behind the Story
What was Your Dumbest Investment?
Share it with us -- and learn from others' stories of flubs.
Community Home
Speak Your Mind, Start Your Blog, Rate Your Stocks

Community Team Fools - who are those TMF's?
Contact Us
Contact Customer Service and other Fool departments here.
Work for Fools?
Winner of the Washingtonian great places to work, and "#1 Media Company to Work For" (BusinessInsider 2011)! Have access to all of TMF's online and email products for FREE, and be paid for your contributions to TMF! Click the link and start your Fool career.