Comments on: Avoid the Biggest Mistake of Early Retirement

By: Jeff Rose

Jeff Rose — Thu, 10 Dec 2015 16:05:55 +0000

In reply to goldie. Hi Goldie, Keeping in mind that I'm not a CPA, my understanding is that if you terminate the 72t distributions, the 10% penalty will apply retroactively to all distributions taken so far (as well as regular tax on the distributions. You need to consult with a CPA for how this will work in your specific circumstances though.

By: goldie

goldie — Fri, 23 Oct 2015 11:34:49 +0000

I started a 72(t) distribution from my IRA this year at age 53 while I was unemployed. I’m now employed and want to roll over the balance of my IRA into my employer’s 401(k) plan. Am I locked into the remaining 72(t) distributions? Or by clearing out my IRA with the rollover am I relieved from taking further distributions?

By: Jeff Rose

Jeff Rose — Sun, 02 Sep 2012 03:29:31 +0000

In reply to gregg. @ Gregg See the reference here: http://www.irs.gov/taxtopics/tc558.html It states,

The following additional exceptions apply only to distributions from a qualified retirement plan other than an IRA: Distributions made to you after you separated from service with your employer if the separation occurred in or after the year you reached age 55

By: gregg

gregg — Sun, 02 Sep 2012 03:02:30 +0000

A little known IRS rule allows folks that retire early, starting at the age of 55, to take premature distributions from their employer sponsored plan while avoiding the 10% early withdrawal penalty

I thought you could only withdrawwithout penalty at age 59.5. Which rule permits withdrawal at age 55?

By: KJ

KJ — Tue, 24 Jul 2012 18:47:35 +0000

That’s interesting, I never would have thought of just leaving my money in the 401(k). I suppose there is a breakeven point somewhere depending on how bad the 401(k) funds are where you are better off taking the 10% penalty and avoiding the bad mutual funds/heavy expenses. Ex. If you have more than X years until early retirement and can save 1% a year in fees, you are better off rolling over and taking the 10% early withdrawal penalty.

By: Joe

Joe — Thu, 19 Jul 2012 19:06:33 +0000

Thanks for the heads up. I recently quit my job and left my 401(k) at my old job. I was thinking about rolling it over to an Ira but now I know better. Great info.

By: Lance@MoneyLife&More

Lance@MoneyLife&More — Mon, 16 Jul 2012 17:31:45 +0000

Thanks for bringing that to light. Unfortunately I have a feeling the rules will change many times in the next 30 to 40 years when I eventually plan to fully retire…

By: Adam

Adam — Mon, 16 Jul 2012 14:51:46 +0000

Great Article! I never new about that sneaky 10% withdrawal fee. Thanks for the advice!