How Can We Help?
< Back
You are here:
Print

Further retirement savings

Posted
Last Updated On
ByRon H.

L1: Further retirement savingsI lost my job just before I turned 55 and am close to 56 years old now. I have a new job that only pays60% of what I used to make and was thinking about tapping my IRA for other funds. I have more thanenough to fund $1000/month. My questions are:Can I continue to contribute to my newcompany 401K (with matching funds)and a seperate IRA while I am on a 72T distribution?I also assume I could use a self directed SEPP IRAaccount that the 72T is associated. Thank you for the information.2009-10-15 15:17, By: Ron H., IP: [97.120.31.70]
L2: Further retirement savingsYES, you can contribute to any retirement plan, while working, and at the same time be taking distributions, including from SEPP 72-T. This does make sense at least up to the MATCHING limit. It doesn’t make sense above that amount. You should set up a separate IRAassociated with the SEPP 72-T using the reverse calculator on this site to determine how much to set aside. Then you should keep the rest of your IRA funds in a separate IRA for future emergencies, or to set up a 2nd SEPP 72-T.However, if you lost your job during 2009, and if your former employer permits it, you should consider taking partial distributions from your 401-K, which are not subject to the 10% penalty if you are 55 or older in the year that you “separate from service”.Further, ask your former employer if there was any NUA( Net Unrealized Appreciation in Employer Shares) in your 401-K, or any company pension BEFORE taking any distributions or rolong the old plan over into an IRA. ( Search this site, or J K Lasser “Your Income Tax” for discussions about NUA.)2009-10-15 16:30, By: dlzallestaxes, IP: [72.78.110.230]

L2: Further retirement savingsRon:As long as you turn age 55 in the same year in which you separated from your previous employer, you may be able to take partial distributions from your old 401k plan without being subject to the 10% early distribution penaltytax. You do not have to be age 55 or more at the time of separation as long as both occur during the same year. While not all 401k plans allow partial distributions, many do. If your old one does, then you can take distributions from it and not have to pay the extra 10% tax. You will owe regular income tax on all distributions of pre-tax contributions and earnings when withdrawn, however.2009-10-16 04:21, By: Ed_B, IP: [98.246.93.80]

L2: Further retirement savingsI was released in June 2008 and turned 55 in January 2009 so I don’t quailify for early 401k distributions do I? Different years? Timing is everything.It is possible to have a self directed SEPP IRA isn’t it?2009-10-16 05:50, By: Ron H, IP: [97.120.31.70]

L3: Further retirement savingsIf by self-directed you mean can your SEPP be set up under a brokerage IRA account or a custodial IRA account where you can control the type of investments… yes.Just make sure thatonly your SEPP funds are included in that account.2009-10-16 12:53, By: Gfw, IP: [216.80.125.206]

Table of Contents