Catching Up to FI

72(t) Expert Tells All: No More Secrets About Early Withdrawals (Part 1) | Bill Stecker | 131

Mar 30, 2025
Guest
Bill Stecker
Bill Stecker, a CPA and founder of 72tcalc/Marble Group, shares his expertise on early retirement withdrawals without penalties. He demystifies IRS code 72(t) and reveals its numerous exceptions, including SEPPs and the Rule of 55. Bill discusses why the age 59½ exists, outlines newer rules for emergencies and domestic abuse, and how combining different exceptions can enhance retirement flexibility. His insights make navigating early withdrawals far less intimidating, paving the way for strategic tax planning.
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INSIGHT

72(t) Frames Early Withdrawal Exceptions

  • Section 72(t) creates a 10% surtax default but lists many exceptions allowing penalty-free early withdrawals.
  • Substantially Equal Periodic Payments (SEPP) is one exception but it is rule-bound and complex.
ADVICE

Pre-Build Flexibility Around SEPPs

  • Pre-build flexible moves and multiple buckets to handle future opportunities or crises without breaking a SEPP.
  • Use reserve IRAs or other liquidity to avoid disturbing a 72(t) plan when emergencies arise.
ADVICE

Use The Rule Of 55 When Applicable

  • If you separate from service at age 55+, use the Rule of 55 to withdraw from your employer plan penalty-free.
  • Confirm the feature is in your plan documents and get a cooperative plan administrator.
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