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Message
401k Withdraw at 59 1/2....finally
Posted on 12/7/21 at 11:28 am
Posted on 12/7/21 at 11:28 am
So I'm turning 59 1/2 in a couple of weeks, before the end of the year. As I understand, this withdrawal will count as income so I need to be careful to limit the amount so I won't fall into the next tax bracket. Tax pros, is this correct? Also, can I withdraw a lump for 2021 before the end of the year? Thanks....
10
Posted on 12/7/21 at 11:55 am to threeputt23
Posted on 12/7/21 at 12:41 pm to threeputt23
Posted on 12/7/21 at 1:38 pm to threeputt23
I mean depending on how big your 401k is I would talk to a CPA instead of asking for advice on TD lol
Posted on 12/7/21 at 2:06 pm to viv1d
quote:
I mean depending on how big your 401k is I would talk to a CPA instead of asking for advice on TD lol
This. I don't need any help growing my retirement stuff, but I damn sure want help on how to withdraw it tax efficiently.
Posted on 12/7/21 at 2:07 pm to threeputt23
You sound like that money is burning a hole in your pocket sir.
Posted on 12/7/21 at 2:35 pm to threeputt23
Do you have a drawdown strategy? What withdrawal rate are you aiming for? Are you still working?
Posted on 12/7/21 at 3:02 pm to threeputt23
Do you need the money now?
If not, don't you have another 10+ years before you must withdraw?
If not, don't you have another 10+ years before you must withdraw?
Posted on 12/7/21 at 3:59 pm to threeputt23
quote:
As I understand, this withdrawal will count as income so I need to be careful to limit the amount so I won't fall into the next tax bracket.
Don't worry about moving from one bracket to another.
Posted on 12/7/21 at 4:21 pm to threeputt23
quote:Please tell me the OT is not the first place/person you asked this question.
threeputt23
Member since Dec 2021
1 post
quote:Yes.
this withdrawal will count as income
quote:You gave no indication on the amount of the withdrawal. So...no idea.
limit the amount so I won't fall into the next tax bracket
quote:Yes - but you'll pay income tax on it and a penalty if you do it before you turn 59 1/2.
can I withdraw a lump for 2021 before the end of the year?
Posted on 12/7/21 at 6:58 pm to threeputt23
See, this is where you should find an advisor…
Posted on 12/7/21 at 7:40 pm to threeputt23
quote:
As I understand, this withdrawal will count as income so I need to be careful to limit the amount so I won't fall into the next tax bracket. Tax pros, is this correct? Also, can I withdraw a lump for 2021 before the end of the year?
If you take pre-tax funds from a 401k, unless it is a Roth 401k, after you reach 59.5 you will likely owe fed and state tax (unless your state has no income tax) and if you were to exchange from the 401k to a Roth IRA you will owe tax. It depends on where the withdrawal puts you after stacking the funds on top of your existing income for 2021 and thereafter if/when you take future withdrawals.
Posted on 12/7/21 at 8:51 pm to TheWiz
quote:I came to realize pretty quickly after I retired that tax minimizations is the name of the game.
I damn sure want help on how to withdraw it tax efficiently.
I’m curious what the OP’s strategy is and why he wants to start pulling $ out of his 401k at 591/2.
Posted on 12/8/21 at 12:51 am to tigerfan4444
quote:
If not, don't you have another 10+ years before you must withdraw?
12+, the age for RMDs is now 72 1/2
Posted on 12/8/21 at 6:24 am to nctiger71
quote:
I’m curious what the OP’s strategy is and why he wants to start pulling $ out of his 401k at 591/2.
Considering the government's seeming propensity to want to literally steal it these days, I can see potentially withdrawing now.
Posted on 12/8/21 at 9:14 am to EA6B
quote:This is incorrect. It's just 72 - not 1/2.
the age for RMDs is now 72 1/2
Posted on 12/8/21 at 10:17 am to nctiger71
quote:
I’m curious what the OP’s strategy is and why he wants to start pulling $ out of his 401k at 591/2.
Spread it out to reduce the tax liability? Taking out $100k a year from 59 1/2 to 72, then starting your RMD's should result in a lower tax burden than starting RMD's at 72
Then again, probably leaving a lot on the table with loss interest.Posted on 12/8/21 at 10:25 am to Weekend Warrior79
Could be a reasonable strategy to reduce RMDs and potential tax bomb. There's no way to know that without an idea of current income, future income, current balance, annual spending etc... If he doesn't need the $ and wants to reduce RMDs, Roth conversion may be another option. But without details impossible to offer any useful insights.
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