What’s the Rule of 72(t)t and Rule of 55?
Navigating early retirement can be challenging, especially when it comes to accessing retirement funds without facing penalties. Two key provisions that can help individuals retire early and avoid the 10% penalty on withdrawals before age 59.5 are the Rule of 72(t)t and the Rule of 55.
Understanding the Rule of 72(t)t for IRA Withdrawals
The Rule of 72(t)t applies to IRAs and offers a way to access your retirement savings early. This rule requires the account holder to make substantial and equal payments for at least five years or until they reach age 59.5, whichever is longer. The payment amount is determined by a specific formula, ensuring consistency over the withdrawal period. This method can be a viable option for those who need to tap into their IRA before the standard retirement age.
What is the Rule of 55? A Key to Early 401k Withdrawals
In contrast, the Rule of 55 is specific to 401k plans and allows individuals to start withdrawing funds as early as age 55 without incurring the 10% penalty. This rule provides more flexibility for those who have left their job and want to access their 401k funds sooner, making it a valuable tool for early retirees.
Casey Smith
President, Wiser Wealth Management
Listen to Our Podcast:
Recent posts
Share This Story, Choose Your Platform!
Wiser Wealth Management, Inc (“Wiser Wealth”) is a registered investment adviser with the U.S. Securities and Exchange Commission (SEC). As a registered investment adviser, Wiser Wealth and its employees are subject to various rules, filings, and requirements. You can visit the SEC’s website here to obtain further information on our firm or investment adviser’s registration.
Wiser Wealth’s website provides general information regarding our business along with access to additional investment related information, various financial calculators, and external / third party links. Material presented on this website is believed to be from reliable sources and is meant for informational purposes only. Wiser Wealth does not endorse or accept responsibility for the content of any third-party website and is not affiliated with any third-party website or social media page. Wiser Wealth does not expressly or implicitly adopt or endorse any of the expressions, opinions or content posted by third party websites or on social media pages. While Wiser Wealth uses reasonable efforts to obtain information from sources it believes to be reliable, we make no representation that the information or opinions contained in our publications are accurate, reliable, or complete.
To the extent that you utilize any financial calculators or links in our website, you acknowledge and understand that the information provided to you should not be construed as personal investment advice from Wiser Wealth or any of its investment professionals. Advice provided by Wiser Wealth is given only within the context of our contractual agreement with the client. Wiser Wealth does not offer legal, accounting or tax advice. Consult your own attorney, accountant, and other professionals for these services.
