401K advice

[Delta6]

I am a 51 year old, 23 year employee with a retirement balance of around 100K. I have been very productive for my company but have been performing with a physical handicap that has gotten worse over time. My job keeps me on my feet for 10+ hours per day and I cannot keep up with my duties much longer. My plan is to leave my current employer and "downsize" to a much less strenuous job closer to home. I know that when I make the move, I'll be expecting less in the way of salary. I hope to suppliment my future salary by ending my 401K contibutions and perhaps drawing a small stipend to compensate for the difference. My monthly expeditures are moderate but I have a mortgage and car loan (under $200) along with the usual expeditures.
I know it's probably not prudent to consider this move but I feel my retirement account can benefit me more now than 15 years in the future. Would anyone have any input as to if my plan is possible? Do retirement accounts allow for this kind of withdrawal?
Your advice would will be appreciated.

[maat55]

Unfortunatly, you will pay tax and a 10% penalty for early withdrawal. If at all possible you should avoid taking money out until you are 59.5. 100k left in a stock mutual fund investment would grow to a nice size in the next 15 years if left alone.(Under normal market conditions)

I fully understand your desire to make the move, I hope you are able to find a way that does not involve taking out of your 401k. Good luck.

[responduser]

Yes, Matt is right.

You have to pay tax and also 10% penalty for early withdrawal.

[jIM_Ohio]

The 100k needs to last the rest of your life. If you could withdraw only 4k per year, your plan might be doable.

Depending on the type of work and experience you have, I would think you could find a desk job which pays what you make now. You just need to find it.

[Like2Plan]

Would anyone have any input as to if my plan is possible? Do retirement accounts allow for this kind of withdrawal?
Your advice would will be appreciated.

401K's do have a provision for early withdrawal (without incurring the 10% penalty), but the payments have to be substantially equal payments based on your life expectancy ...

Here is a link to a blog that goes into a lot of detail on the topic--the blogger recommends seeking professional advice setting up to make sure it is done correctly (and I totally agree).

What are the consequences of early withdrawal from my 401k plan?
"The withdrawals meet the "substantially equal payments" criteria...."


Here is a link to Kiplinger.com

[tripods68]

I am a 51 year old, 23 year employee with a retirement balance of around 100K. I have been very productive for my company but have been performing with a physical handicap that has gotten worse over time. My job keeps me on my feet for 10+ hours per day and I cannot keep up with my duties much longer. My plan is to leave my current employer and "downsize" to a much less strenuous job closer to home. I know that when I make the move, I'll be expecting less in the way of salary. I hope to suppliment my future salary by ending my 401K contibutions and perhaps drawing a small stipend to compensate for the difference. My monthly expeditures are moderate but I have a mortgage and car loan (under $200) along with the usual expeditures.
I know it's probably not prudent to consider this move but I feel my retirement account can benefit me more now than 15 years in the future. Would anyone have any input as to if my plan is possible? Do retirement accounts allow for this kind of withdrawal?
Your advice would will be appreciated.

You can excercise what's called IRA 72t - Early withrawals prior to 59 1/2 without paying 10%. The way it works, 72T will allow you to withdraw money in substantial steady stream of cash--like an annuity "EQUALLY" for the next 6 years until you reach 59 1/2 or 60. When you leave your Employer, you can decide where to make the rollover of your 401(k) both IRA and Annuity allows 72t to happen which also gives more investment choices.

Read the rest of the publication they are exceptions to the rule (like death or disability) and also describes the two IRS methods you must adhere in order the to calculate the withdrawal amount.

http://www.irs.gov/pub/irs-irbs/irb02-42.pdf

[anonymous_saver]

I would not advocate for this poster to take out any of their 401(k). They are 51 years old, and need to focus on increasing their 401(k) contributions ASAP. If this means downsizing your home or car, do it. This is really important! When are you planning on retiring? If you retire when you are 62, would you be able to live on social security and $100k for the rest of your life?? I'm not trying to scare you, but instead I'm just trying to get you to think about these things.

I do think you should look for another job, because you really can't keep on working at a job that is physically not a fit. If you continue at your current position, you might even be forced into retirement earlier because of your phsyical restrictions. I would also look for a job that has fantastic retirement benefits (maybe a large 401(k) match for example, anything to boost up your savings!).

What is your annual income currently? What do you think you could get at a job where you primarily sit down.

Do you have a pension through your current company?