We always hear the importance of taking advantage of our 401K and IRA accounts. The tax advantages and employer match are too good to pass up on. But is this true for early retirees? If I’m planning on retiring in my 40s, should I be locking my money away in these accounts? How do I bridge the gap between early retirement and 59.5 - the age at which I can withdraw from these accounts penalty-free?

Well, the good news is that isn’t 100% true. There are ways to withdraw from these retirement accounts early without paying a 10% penalty and some of these strategies are fairly simple.

Sean Mullaney, President of Mullaney Financial & Tax and writer behind the informative blog, FITaxGuy.com, is here to share how to do this.

In this episode, we deep dive into a couple of the strategies to ensure that your money can be accessible to you if you retire before 59.5. Sean also shares a tax-efficient strategy for which accounts you should withdraw from first.

This is Sean’s 3rd appearance on the show. He also appeared in episodes 39 and 40 where we discussed what you need to know about taxes in your 20s and the mechanics of an HSA.

Every time Sean comes on the show I learn something new. Through this conversation, he actually changed my mind about how I am currently funding my Roth and Traditional accounts. He’s such a wealth of knowledge whenever it comes to the tax code and tax planning.

If you also want to learn from Sean, let’s get into it. I hope you enjoy my conversation with FI Tax Guy…Sean Mullaney.

The discussion is intended to be for general educational purposes and is not tax, legal, or investment advice for any individual. Justin and The Struggle is Real podcast do not endorse Sean Mullaney, Mullaney Financial & Tax, Inc. and their services. 

Key Takeaways:

• A tax-efficient ladder for funding your life post-FI
• How to manage “uncontrolled income” in your brokerage account
• Long-term vs short-term capital gains and how they’re taxed
• Roth basis: contributions and conversions
• Other exceptions to withdrawing money penalty-free from your retirement accounts

Mentions:

Accessing Retirement Accounts Prior to 59.5: https://fitaxguy.com/accessing-retirement-accounts-prior-to-age-59-%c2%bd/

IRS Exceptions to tax on early distributions: https://www.irs.gov/retirement-plans/plan-participant-employee/retirement-topics-exceptions-to-tax-on-early-distributions

IRS Publication 502: https://www.irs.gov/forms-pubs/about-publication-502

More of Sean:

Blog: https://fitaxguy.com//

YouTube: https://www.youtube.com/@SeanMullaneyVideos

More of The Struggle is Real:

Find show notes and more at https://www.tsirpodcast.com/

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