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How Do I Avoid a 10% Penalty Pre 59 1/2?



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hello and welcome to weekend wisdom

today we're gonna talk about how to

avoid a 10% penalty when taking money

from your retirement accounts of course

this is pre fifty nine and a half

so grab your cup of coffee sit back and

let's get started

hello this is Michael Loftus for wealth

and wisdom TV where education is the key

to a successful financial future first

up don't forget you can click show more

for additional information and links on

today's video also if you find this

video of value please do consider

subscribing so today we're going to talk

about the 10% penalty that you get if

you are pre 59 and a half and taking

monies from your retirement accounts

whoo that's a mouthful but this will be

a quick one so first let's talk about

401ks alright most folks have 401ks

working there what do you do here option

number one is take a loan you can take a

loan it'll come back out

it is tax-free that loan of course you

have to pay it back now I do have a

video that we can put up here okay about

taking loans from your 401k so I'm not a

big believer and I think they're very

expensive you can also get penalties if

you don't pay back so but that is an

option next is rule 55 this is actually

an IRS code meaning if you are over the

age of 55 so your monies are in your

401k you have left you've retired

okay so pre 59 and a half if you take

money okay that you're gonna have to pay

that penalty but in this case rule 55 as

long as you have separated from service

allows you to take that money from your

401k without penalty you still have your

taxes based on your tax bracket but you

can avoid it a lot of times when clients

come over we'll keep a portion in their

401k so we can take advantage of rule 55

next one is how about for individual

case what is that individual Kaiser for

solo business owners now we don't have

that we have a 401k but if you're a solo

business owner a lot of times we'll see

individuals leave their corporate job

role over into an IRA and you have no

loan provisions well here it allows you

to roll into an individual K which is a

401 K for an individual all right I'm

not gonna get too much into that we'll

put a link below on what it is but you

can take loans from that without the big

loan charges and fee so that is another

option as well so how about a regular

IRA well here pre 59 and a half again

you're going to be taxed but you can do

what's called 72 t72 t allows you to

take equal in periodic payments until 59

and a half or 10 years whichever sooner

so if you're 55 and you have an IRA you

can set up equal substantial payments

you're gonna be taxed on the withdrawal

just not a 10% penalty you can call your

custodian your advisor there is a factor

that changes the Fed factor that will

determine the amount that you're allowed

to take out next up how about annuities

well annuities don't do a lot but I came

from the annuity business when I was on

the distribution side they had 72 q kind

of weird cuz you have 72 t4 I raise Q

you would think qualified but 72 Q

allows you to do the same thing in

annuities equal periodic payments 59 and

a half or 10 years so you have some

flexibility there as well so this is

just another way as you do a financial

plan and you plan for the future we are

seeing more people retire 55 to 58 years

old so it's good to understand and be

educated about your options thanks so

much for watching Michael Loftus wealth

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