avoid 72T-early retirement
L1: avoid 72T-early retirementI am planning to take an early retirement package later this year at 53 years old. Company will continue to pay my salary until 54.5 years old (18 month severance package). I won”t be able to draw on my pension until 55 years old (will have 30 years service with no actuarial reduction).I understand that Ipresently cannot use the 55 year old IRS exception ”rule” to drawagainst my 401K as the 18 month severance packagedoes not consider me as an active employee.
Could someoneguide me on the following questions in lieu of setting up a 72T for the five years at 54.5 years old:1) if I obtain new employment in the yearI turn 55 years old and the new company has a 401K, can I then roll over my prior 401K funds into the new 401K and then begin drawing that same year? Do I need to quit my new employment before drawing funds from the new company 401K or can I continue to work while drawing funds?
2) if I need to quit full time employment before drawing in the year I turn 55 years old, can I still work somewhere else part-time?
Thanks ahead of time for any help you can provide.2008-05-27 18:22, By: Mike, IP: [18.104.22.168]
L2: avoid 72T-early retirementThe key is finding a company who will allow you to roll your curent 401-K into theirs. If you do find one, then technically you could roll it in, but then you cannot use the “early distribution” rules until you SEPARATE FROM SERVICE from the 2nd company.
Once you “retire” and separate from service from a company, you can work full or part-time for another company, and still qualify for this exclusion.However, you could set up your own company, set up a 401-K there, and then you can control the whole situation.You have 18 months to PLAN what you are going to do. At 54 1/2, a regular SEPP 72-T could be a perfect fit for the 5 years to 59 1/2 to supplement lower income from another job for those 5 years.
If you ultimately like working at the other company, you sould work to 70, and defer SS benefits until 70 to get an automatic 32% increase in your SS benefits for your life, and your wife”s.2008-05-27 18:48, By: dlzallestaxes, IP: [22.214.171.124]