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Finance Question Answered
Finance Question Answered
Answered by: Arin Goldman
Vivian asked the question:
“Does one have to be retired to remove money without penalty from an IRA, 401K, 403B etc at age 59 1/2?”
Arin’s answer to Vivian’s question:
Once you reach age 59 1/2 you can start taking money out of your IRA or 401K in any amount you want. Keep in mind that you’ll owe tax on the amount you withdraw from a traditional account. The amount that you withdraw will be added to your other income and you will pay taxes based on your total income. With a Roth, there’s no tax at all provided your account has been open at least five years and you’re 59 1/2. Most advisors recommend that you hold off witdrawing funds from your retirement accounts until you’ve actually retired because at that point you will presumably be paying taxes at a lower rate and because you probably will need your retirement funds to last as long as possible. I recommend that you check with your financial advisor and/or accountant to make sure that withdrawing funds makes sense for you.
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Tags: answers, boomer, finance, imagineage, investing, IRA, midlife, money, questions, retirement
Thank you Arin.
Vivian as a further answer to your question, you might check out this article at the Market Watch website entitled Early 401(k) withdrawals imperil retirement: GAO http://shar.es/1vkG9. The article discusses how even small early withdrawals from retirement accounts can have a serious long-term impact on your ability to retire comfortably. If someone is still working at age 59 1/2 I generally discourage withdrawals from retirement accounts unless there is a real financial need. As Arin said in her answer, I would suggest that you consult with your financial advisor before making this decision.