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While at dinner at my parents home I told them about the company SIMPLE-IRA we're being offered. My mother made a comment that confused me, so I figured I'd ask for some more help.

She mentioned(this is her belief) that if all our money is tied up in retirement accounts(401k, SIMPLE-IRA and Roth's) we'd have to pay a penalty if my wife or I retired early. So if my wife chooses to retire at 40 we pay penalties on any money we withdraw becuase she's not of "retirement age".

I was always under the impression the penalty for early withdrawl was for those NOT retired. If it's a retirement account AND you're retired why would there be a penalty? I thought the rules basically required minimum withdrawls by a certain age(59 for some and 70 for others).

If what my mother said is true then I really think it may be wise for us to have some money in a taxable account even if we don't fully max all the retirement accounts we have access to. We're not sure if we will retire early but I'd be upset if say in 20yrs we wanted to BUT had to pay penalties becuase our money was in retirement accounts. That just doesn't seem fair to me.

Any input on this would be greatly appreciated,
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