• I love these tips. I definitely plan to tap my roth IRA contributions after I have used all my taxable accounts. There are so many loopholes at this point that it shouldn’t be a huge deterrent to get the money that you need in retirement 🙂

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  • TheGipper

    Non-governmental 457b can unfortunately not be rolled into an IRA.

    • True. Many of us work for non-profit hospitals that are not government-affiliated. I have a 457(b) and plan to drain it like a swamp within my first five years or so of early retirement, but I do not have the ability to roll it over into a 401(k). If I did, I would, and slowly convert it to Roth.

      I won’t mess with the original post of WCI’s, but I’ll make an addendum.


  • This is a great guide for the FIRE community. Some of these ideas do require careful implementation. For example, the math behind the SEPP rule can be a bit confusing.

    I was suckered into a permanent life policy. Luckily, I joined the PF community to confirm my permanent life policy was a bad idea. I took my $12k cash value and started a taxable account!

    • Good for you! I’ve become convinced that a taxable account is one of the best things we can create for early retirement. No, it doesn’t have a ton of tax advantages, but it gets an “A” for accessibility!

  • ArmyDoc

    As part of #1, remember you could “turn off” dividend reinvestment and have your dividends roll into a cash management account to use. Depending on the size of your taxable account, the dividend income could be significant. You are paying taxes on this year’s dividends this year anyway, so accessing the dividends from your taxable account is completely neutral to your long-term tax plan.

    • I do this now. I manually reinvest the dividends, but if I had a need for cash, it’ll be there once a quarter.

      I redirect dividends to a money market fund in case I were to take advantage of tax loss harvesting within 30 days of a dividend payment. I don’t want an inadvertent wash sale. Learned this the hard way a few years ago. It wasn’t much of a wash, but still…


  • These are great tips-my husband isn’t on board with FIRE, so I’m focusing on achieving FI while still keeping RE as an option in the event that something changes in the future. This is primarily through retirement accounts right now so it’s great to have some options that will allow us to pull out some of the money if that ends up being the case.
    It’s really important to note on the SEPP that the requirement is the later of 5 years or 59 1/2 years old. An early retiree would have to commit to a considerable amount of time receiving the SEPP.

  • ChasesFIsh

    Can you really use a 401k distribution to pay for medical insurance?? Haven’t heard that one before.

  • Some of the tips are very good, like burning Taxable account first and don’t touch IRAs and 401(k)s, but I would question the last three tips.
    401(k) loans, yes sometimes it works good on paper, but in reality, especially if you leave your employer.
    Cash Value Life Insurance – considering the price difference, I’d rather buy term life insurance and invest the difference

  • I have some questions about the 457. Like you I work for a nonprofit, nongovernment hospital with a 457.

    If you change jobs to a new hospital that doesn’t have a 457, should you withdraw your 457 and just put it in a taxable account? Assuming, 1. that your previous hospital is financially stable and 2. that you don’t have access to a new 457.

    • That’s a tough spot to be in. Different plans have different distribution rules. You may not want to take it all at once in a lump sum because you’ll pay taxes at your marginal tax rate. If you can take it a little bit at a time, that might be better. If you can delay payments from starting until you’re fully retired, that could be idea.

      There is always the risk that the employer goes under, in which case you could lose some or all of it, too. Very rare, but you never know.

  • I forgot about this one, “Pay for medical insurance”. That’s a good one to remember. I also think the SEP rule is a good one for some folks. And it is surprisingly not known by most people.

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  • Harry

    This is the biggest problem I’m having with my early retirement plan. Most of my net worth is in deferred accounts. The guidance in the FIRE world at a high level is 401k, then Roth and then after-tax. My after-tax balance isn’t growing as fast as it’s the last place I’m putting money. I’m thinking I need to shift more of my savings percentage to after-tax to have enough funds available prior to 59.5. Is there a rule of thumb on what percentage of your overall net worth should be in after-tax? Is there a threshold to where one would stop or slow down on contributing to a deferred account and focus more on after-tax?

  • Dr. Mo

    Really like how well you organized this information.
    I think that 10% penalty should be put into a little perspective for some.

    Those who want access to their qualified accounts may consider just paying that 10% because, in fact, you may not be losing a real 10%.
    Assuming you have been invested for 10 years and have had average market growth, taking out tax-savvy chunks every year until age 60 would still put you ahead despite the 10% penalty.

    • True Dr. Mo, but there may be a better way. Start Roth conversions 5 years before you need the money, and convert some annually. Then, you can take the Roth conversion money out annually (after it has “seasoned” for 5 years) penalty free. The so-called Roth conversion ladder.


  • Great list PoF!

    I’m actually going to be accessing my 401(k) using a Roth IRA Conversion Ladder once I quit the 9-5. It’ll be 5 years before I can actually start using the funds, but it will be penalty-free and I’ll use my taxable accounts and rental income to cover our expenses during that time.

    — Jim

  • Excellent point on the medical insurance one. That’s actually new since I wrote the post. But you can take an amount out of your retirement accounts equal to your medical insurance premiums every year without having to pay penalties on it.

  • Rule #3, Substantially Equal Periodic Payments, is IRS rule 72 (t) for those of you who want to reference it. If you are interested in leaving medicine early, you will want to read my upcoming book, “The Doctors Guide to Smart Career Alternatives and Retirement.” It should be available in June. I wrote this in response to the many doctors who are ready to change professions or retire. I left medicine at age 54 and plan to be using this rule for the next five years myself. You can read about my experience of early retirement, which I have called repurposing, and it may help you with your transition.

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  • MedMO

    There is the “Rule of 55,” which I fall under. If your institution you retired from allows it, you can take 401k and 403b withdrawals if you were 55+ the year you retired. But you can’t do it if it’s rolled over to another account.

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