72(t) Articles

At what age can you start a 72t?

The 72t is a great retirement planning tool that can help you access your retirement funds early without incurring the 10% penalty. But before you can start taking advantage of this option, you need to know at what age you can begin. In this blog post, we’ll discuss the age requirements for starting a 72t and how it works.

What Is a 72t?

A 72t is an IRS-approved method of accessing your retirement funds early without incurring the 10% penalty. It allows you to withdraw money from your retirement account before reaching the age of 59 ½ and avoid the 10% penalty that would normally apply. The 72t is also known as Substantially Equal Periodic Payments (SEPP).

How Does It Work?

The 72t allows you to withdraw money from your retirement account over a period of time, usually 5 years or until you reach 59 ½, whichever comes last. The amount of money withdrawn must be equal each year and must be calculated using one of three approved methods: amortization, annuitization, or required minimum distributions (RMDs).

Tax Implications of a 72t

It’s important to note that while the 10% penalty may not apply when using a 72t, taxes will still need to be paid on any money withdrawn from your retirement account. Depending on your tax bracket and other factors, this could mean that up to half of your withdrawal could go towards taxes. It’s important to consult with an experienced financial advisor or tax professional before starting a 72t in order to understand all of the potential tax implications involved with this type of withdrawal strategy.

Conclusion

The 72t is an excellent way to access your retirement funds early without incurring the 10% penalty that would normally apply. However, it’s important to understand that there are age requirements and considerations for starting a 72t and taxes will still need to be paid on any money withdrawn from your retirement account. If you’re considering using this option as part of your retirement planning strategy then it’s important to consult with an experienced financial advisor or tax professional in order to understand all of the potential implications involved with this type of withdrawal strategy.

The Spivak Financial Group (home of the 72t Professor) are experts in the early retirement options and setting up 72(t) SEPP. Schedule your complimentary consultation, and let’s talk through your questions.

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