72t at 40?

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L1: 72t at 40?
This would be a new plan. My date of birth is Jan 23rd 1985 and my first distribution would be January of 2025.

I have always expected to retire early and a good chunk of my money is tied up in an IRA rollover from a 401k. I’ve seen a lot of posts about why people shouldn’t take a 72t but I just need to check to make sure I understand how the whole thing works. I fully intend to talk to an expert before doing any of this of course.

I would be 40 when I take my 72t and I have an IRA balance of $400,000 generating 4% in dividends each year that are directed as cash to the account. I use the Amortization table at 2.5% to get a distribution number of $15,169. Every year I take out $15,169 while my account gains $16,000 in dividends. At 59 1/2 the account becomes free, I do whatever I want with my now over $400,000 (assuming no stock market crash).

Am I missing any crucial detail here? It seems fairly simple to maintain that payout as long as the dividend funds are sufficiently defensive and the world doesn’t implode. All of my holdings are blue chip index funds so barring World War 3 I can sleep at night with their dividend and value track records.

It seems pretty simple to me which makes me think I have missed something through all my reading. Any thoughts or insight would be appreciated.
2019-01-09 03:19, By: SP, IP: []

L2: 72t at 40?
I did it at 36 a couple years ago. You may be interested in checking out bamfmoneydotcom about 72t at an early age.
If your strategy is dividend growth as well, you build up a cushion on your dividend income vs the distribution. This year I have crossed over where dividends are kicking out more than my 72(t) distribution by a couple grand, and 2019 will have an even wider disparity.
Down the road if your account gets good growth, you can switch from the amortization method to the lifetime method and that could actually get you more of a 72(t) distribution and depending on dividend growth, you may not even dip into principal.
2019-01-09 03:44, By: brkr12002, IP: [2001:5b0:50c6:a1c8:9053:299:ada6:a4de]

L3: 72t at 40?
Thanks for the reply. That was how I was envisioning it working. I’m glad to hear that there are other people out there with the same idea that has so far seen success.
2019-01-17 00:05, By: SP, IP: []

L4: 72t at 40?
No problem. I actually went back to work for a little bit, but about to leave again for a couple years shortly
2019-01-18 03:33, By: brkr12002, IP: [2001:5b0:50c6:a1c8:2076:19de:99a:fc30]