Ways to access 401k money before 59 1/2
01-26-2014, 09:10 AM
#3
Gets Weekends Off
Joined APC: Jun 2011
Posts: 134
Series Substantially Equal Periodic Payments
What is your goal? You use the verb "access."
It doesn't sound like you are truly in the market to fund a start up business with your IRA nest egg. Are you buying a McD's franchise?
Maybe you simply wish to start taking distributions before 59.5?
If so, 72T might be what you want.
Say you are 50 years old, no longer working (can't get SSI yet obviously), and thus want to start taking distributions.
Say you had $342,000 in the IRA you wish to use. (If you want more or less money tied up in the SOSEPP then rollover to/from another IRA). This will make your payment bigger or smaller. It has to be done before starting the SOSEPP.
Using one method under 72T, you would divide your balance by your life expectancy.
$342,000 / 34.2 years and arrive at $10,000 per year. This is just over a $800 a month paycheck.
You have to keep the SOSEPP running for the longer of 5 years or until age 59.5.
If you aren't really aiming to draw on your retirement account, and just need the money for something, then you can take a loan. But this is just about the worst possible place to borrow money (besides a payday advance store).
It doesn't sound like you are truly in the market to fund a start up business with your IRA nest egg. Are you buying a McD's franchise?
Maybe you simply wish to start taking distributions before 59.5?
If so, 72T might be what you want.
Say you are 50 years old, no longer working (can't get SSI yet obviously), and thus want to start taking distributions.
Say you had $342,000 in the IRA you wish to use. (If you want more or less money tied up in the SOSEPP then rollover to/from another IRA). This will make your payment bigger or smaller. It has to be done before starting the SOSEPP.
Using one method under 72T, you would divide your balance by your life expectancy.
$342,000 / 34.2 years and arrive at $10,000 per year. This is just over a $800 a month paycheck.
You have to keep the SOSEPP running for the longer of 5 years or until age 59.5.
If you aren't really aiming to draw on your retirement account, and just need the money for something, then you can take a loan. But this is just about the worst possible place to borrow money (besides a payday advance store).
02-04-2014, 10:28 AM
#5
Gets Weekends Off
Thread Starter
Joined APC: Sep 2007
Posts: 114
Ultimately the 401k will become an IRA for a variety of reasons.
I know the IRS probably keeps a close watch and that there is an established process, but what stops someone from creating a C corp and compensating themselves via company stock?
I figured since the crooks who run corporate America are compensated via stock, why not me? Lol
I know the IRS probably keeps a close watch and that there is an established process, but what stops someone from creating a C corp and compensating themselves via company stock?
I figured since the crooks who run corporate America are compensated via stock, why not me? Lol
02-04-2014, 10:37 AM
#6
Gets Weekends Off
Thread Starter
Joined APC: Sep 2007
Posts: 114
72t
I'm well read on the nuts and bolts of a 72t, I'm curious if anyone here has actually followed through and would they do it again?
From what I know about 72t, it appears to be an essential tool if you're trying to reach financial independence and a self determined life at an early age.
From what I know about 72t, it appears to be an essential tool if you're trying to reach financial independence and a self determined life at an early age.
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