I am annoyed with all of my financial independence podcasts. Am I the only one who sees the new SEPP “72(t) exception” rules as a game changer for early retirement? Especially if you over-funded traditional retirement accounts.
Previously you were kind of screwed if you put too much money into your retirement accounts other than the very limited amount you could withdraw under the previous SEPP rules. But now, you can actually get a decent piece of it without incurring any early withdrawal fees. It seems as good as purchasing an annuity except you don’t get the guarantee, but you do get to keep what is left at the end. Surely, ChooseFI, Afford Anything and the Mad Fientist will start talking about this soon.
Plus, you can continue enjoying the tax benefits of putting money away in tax deferred offerings.
Here are the few resources actually discussing it online:
Now we no longer have to try and completely rely on building up enough cash/taxable account funds before retiring to then be able to attempt a Roth conversion ladder. This gives immediate flexibility to maintain our course to retire in 2026.
I know I said something that can only be modified one time gives us flexibility, but it does in the way we need it.
Say we have one IRA with $325,000 using the calculator at age 43 and 45, 5%, single life expectancy, we can withdraw $18,500/year. That is almost a third of our projected need of $60,000. In another 401k plan, assuming a minimum 4.8% rate of return over 19 years til 59 and 1/2, that account should have enough to sustain retirement (not counting what’s left in the SEPP account).