One of the most-asked questions we got on last week’s “Ask a Bank On Yourself Advisor” live online event was…
“Can I roll over funds from my 401(k)/IRA/403(b)/TSA into a Bank On Yourself plan – and what are the tax consequences?”
This is actually a common method people use to fund a Bank On Yourself plan.
Here’s how a retirement plan rollover works…
Any time you’re funding a tax-deferred plan – like a 401(k), IRA, 403(b) or TSA – you will pay taxes on your withdrawals. There’s no getting around that.
But if you haven’t turned age 59-1/2 yet, you’ll also pay an additional 10% tax penalty, UNLESS you take advantage of Internal Revenue Code 72(t).
That’s shorthand for a provision in the tax code that allows you to take early distributions from your retirement plan or IRA and avoid the 10% penalty.
You can avoid that penalty as long as the distributions are made as part of a “series of substantially equal periodic payments” (or SOSEPP for short).
Once you start taking these distributions, you have to keep it going for the longer of five years or until you reach age 59-1/2.
There are three different methods you may use to determine what your withdrawals would be. Rather than spell that out here, here’s a link to a list of 12 FAQ’s regarding the 72(t) on the IRS’ website.
Retirement plan rollovers are only one of the 8 common ways to free up money to fund a Bank On Yourself plan
These range from restructuring debt, to reducing funding of your traditional retirement account, converting existing life insurance policies, and tapping your savings.
Moving some of your “safe” money into a Bank On Yourself safe wealth-building plan can result in your dollars working much harder for you, without losing sleep. The return is many times greater than you can get in a CD, money market or savings account – but without the risk of stocks, real estate or other volatile investments.
The Bank On Yourself Authorized Advisors are masters at helping people restructure their finances to free up more seed money to fund a plan (or to start additional plans) that can help you reach your goals and dreams in the shortest time possible – without taking any unnecessary risk.
Stay tuned as I answer more of the most frequently asked questions from the “Ask a Bank On Yourself Advisor” event over the coming weeks.
Add the Bank On Yourself method to your financial plan today
To find out how you could enjoy guarantees and peace of mind by adding the Bank On Yourself method to your financial plan, request your free, no-obligation Analysis right here, if you haven’t already done so.