Liquidity And Workarounds

Accessing retirement funds early can be tricky, but there are some strategic exceptions. Here’s the core points from the lesson:

• Withdrawing from 401(k)s or pre-tax IRAs before age 59.5 typically triggers a 10% penalty, though exceptions exist for things like first-time home purchases, disability, or high medical costs
• Roth IRA contributions (not earnings or conversions) can be withdrawn at any time, penalty- and tax-free, while Roth conversions require a five-year wait before penalty-free access
• Strategies like the Roth conversion ladder or 72(t) withdrawals (Substantially Equal Periodic Payments) can help bridge the gap if retiring before 59.5
• If you leave your job at 55 or older, you can take penalty-free withdrawals from that employer’s 401(k), and possibly from other plans rolled into it

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