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I'm 29 now, but really trying to do my best in planning for my husband's and my retirement while still also holding aside money for other "life goals", like sending our child(ren) to college.

Basically, my question has to do with 401Ks and IRAs (ROTH, specifically).

My husband (who is one year older than me) and I would like to retire when I turn 50 years old. However, due to our income constraints, most of our investing is in "retirement accounts". For example, we try to max out our contributions to our ROTH IRA for each of us each year, and we attempt to put the maximum allowable into each of our 401K's. So that accounts for the bulk of our investing. We are also putting together Education IRAs for our two children so that we will have some savings around paying for their college when the time comes.

HOWEVER - my question is: How do I fund the nine and a half years between our desired retirement age (50) and our "qualified distribution age" (59 1/2), while incurring the absolute minimum of tax and/or penalty?

I'm confused on some specifics:

I know I can convert my 401(K) into an IRA. Then, there seems to be some sort of rule (I think it's under 72(b), whatever that is???) that mentions "substantial equal payments over the expected life expectancy of the owner". Those "substantial equal payments" allow me to avoid the 10% PENALTY assessed on non-qualified distributions, but what about the rest of it?

For example:
Are there taxes associated with the distributions? If so, how are they assessed - as capital gains? Income? Or, if I'm taking it out of a ROTH, do I have to use the FIFO rule of taking out contributions made, first, then dipping into the gains?

Do those taxes on the "substantial, equal payments" stop when I do hit 59 1/2 (as I am then taking QUALIFIED distributions? Or do they continue once the precedent is set?

How do I calculate what a "substantial, equal" payment is? Are there rules?

What is are the problems associated with converting my 401K to an IRA, tax-wise?

What other strategies can you recommend for funding those "non-income" years between 50 and 59 1/2?

Thanks for any suggestions or direction you can provide!

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