Nice to have options. Filling all three retirement buckets. This when day arrives you are in control and can decide what’s best for you! Options got to have options! ✅
Ari, great video!. Just one comment on the rule of 55: Yes, the IRS states that you will not have a penalty from taking 401k distributions after you leave your employer on the year you turn 55yo or later. However, company plans don’t have to allow partial distributions after you separate from service, and in fact many plans only allow you to either leave the money in the plan or take a full distribution or full rollover to an IRA. If people are counting on the rule of 55, they should check the plan document and with the plan administrator, and get it in writing! In my case I got burned, as the plan document was silent on this (although did say that a penalty would not apply if taking a distribution after 55), and the plan administrator (Fidelity) told me TWICE before I quit that partial distributions were allowed. It turned out to be incorrect and I couldn’t take partial distributions and ended up moving all of it to a rollover IRA since I wanted to do Roth conversions. Lucky for me I was not counting on those distributions to bridge the gap to 59.5, or else this would have been a devastating surprise...
Great point! I wish more RUclipsrs would mention that critical point. I checked my plan and it only allows distributions after 65. My guess is that most plans don't allow separation of service after 55 because most people don't actually retire at 55. Why would a 401K plan include early distributions when no one would utilize it? You have to remember that your 401K is set up by your company HR and they have no idea what they are doing. Glad you weren't counting on those distributions. I'm filling up my taxable account to bridge the gap.
I would compare stopping retirement investing to planting seeds. If you plant a seed and let it grow for 30 years you might have a 60 foot tree in that time. If you save for a short time it's like pulling the plants out of the garden before you can harvestm
It really depends on the incomes. It could be CHEAPER to pay that 10% penalty, than to pay the high marginal tax rate. Also, if super early, you want a Roth ladder.
![[DRAGON BALL LEGENDS REVEALS ＆ STUFF] LEGENDS FESTIVAL 2024 Special Edition Part 1](http://i.ytimg.com/vi/mV5bGIswTtQ/mqdefault.jpg)
Nice to have options. Filling all three retirement buckets. This when day arrives you are in control and can decide what’s best for you! Options got to have options! ✅
Ari, great video!. Just one comment on the rule of 55: Yes, the IRS states that you will not have a penalty from taking 401k distributions after you leave your employer on the year you turn 55yo or later. However, company plans don’t have to allow partial distributions after you separate from service, and in fact many plans only allow you to either leave the money in the plan or take a full distribution or full rollover to an IRA. If people are counting on the rule of 55, they should check the plan document and with the plan administrator, and get it in writing!
In my case I got burned, as the plan document was silent on this (although did say that a penalty would not apply if taking a distribution after 55), and the plan administrator (Fidelity) told me TWICE before I quit that partial distributions were allowed. It turned out to be incorrect and I couldn’t take partial distributions and ended up moving all of it to a rollover IRA since I wanted to do Roth conversions. Lucky for me I was not counting on those distributions to bridge the gap to 59.5, or else this would have been a devastating surprise...
Great points here! Thank you.
Great point! I wish more RUclipsrs would mention that critical point. I checked my plan and it only allows distributions after 65. My guess is that most plans don't allow separation of service after 55 because most people don't actually retire at 55. Why would a 401K plan include early distributions when no one would utilize it? You have to remember that your 401K is set up by your company HR and they have no idea what they are doing. Glad you weren't counting on those distributions. I'm filling up my taxable account to bridge the gap.
I would compare stopping retirement investing to planting seeds. If you plant a seed and let it grow for 30 years you might have a 60 foot tree in that time. If you save for a short time it's like pulling the plants out of the garden before you can harvestm
Love that
Crud, I'm 52 with about $3mil and want to retire next year. But I'm still maxing my 401(k) witholdings. Guess I'm way behind the curve.
Right on fella
Thank you sir!
It really depends on the incomes. It could be CHEAPER to pay that 10% penalty, than to pay the high marginal tax rate. Also, if super early, you want a Roth ladder.
Yes! It depends!