Home / Business / We have $ 1.6 million, but most of them are locked into our 401 (k) plan – how do we retire early without paying a lot of taxes?

We have $ 1.6 million, but most of them are locked into our 401 (k) plan – how do we retire early without paying a lot of taxes?



I’m trying to find a way to retire within the next two to three years and need some help.I’ll be 54 this summer and my wife is 48.Between us we have made about $ 210,000. g Years.We now have about $ 1.6 million saved with $ 680,000 in my former employer 401 (k), $ 300,000 in my wife’s former employer 401 (k), $ 600,000 in my current employer 401 (k). k) and $ 75,000 in the stocks we hold. I currently donate approximately $ 25,000 to my 401 (k) every year, including my employer match.

We have a vacation home worth $ 225,000 paid and approximately $ 250,000 in stock in our current home. Now we have two kids in college. But will be completed within next year I feel like we can spend about $ 70,000- $ 80,000 in savings every year, but we want to travel in an RV a lot when we retire, and we want to do this while still being able to enjoy the outdoor lifestyle. We will reduce one house, either a vacation home, or we will sell both and move / build another, but we will have to live in a vacation home for two years to avoid paying any profits from the sale.

I feel like we have enough savings and will continue to grow in the next few years before we decide to call it quit. But the challenge is how to raise money, because it̵

7;s all in the 401 (k) plan. Right now, we can raise funds for a year by selling the shares we hold. But it still needs to have at least another year of funding before we can get into my 401 (k) at age 59 1/2.

Is paying a 10% penalty for early withdrawals versus paying taxes and converting large amounts of old 401 (k) plans to Roth? My company allows withdrawals through Rule 55, but you have to withdraw them all and I know I don’t want that tax liability. Any help or advice would be appreciated.

thank!

Check out MarketWatch’s “Retirement Tips” column for actionable tips for your own retirement savings journey.

Dear reader

Congratulations on collecting noble nest eggs. You put forward an interesting dilemma.Some retirement assistants might be unthinkable: having your retirement assets locked in an investment portfolio that is meant to be used as you get older.

An employer-sponsored retirement account, such as a 401 (k) plan, is a great tool for retirement investments as it is a deferred account, meaning there is more money to be added until it’s time to withdraw. It also has a higher annual contribution limit than other taxable portfolios such as personal retirement accounts. But, as you are experiencing, money can be difficult to withdraw for those who want to retire before age 59, as they will be subject to a 10% penalty on the tax they will have to pay from the distribution.

Fear not – there is a solution to this problem, the financial advisor said.

The first task is to double-check your company policy for the 55-year-old rule (for readers unfamiliar with the rule, it is permissible for those 55 and older to be excluded from the job, whether because they were right. (Sacked or voluntarily dismissed 401 (k) from current employer before age 59). Companies may have their own requirements regarding this rule, but “all or none” policies seem to be rare. Henry Hoang, Founder of Bright Wealth Advisors say

If this is really not possible, there is an option 72


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