1099 Business and Retirement Plans

[trfie]

Am in this situation for the first-time. In my research I have not come across any good options for EREs, ie none of the options (including an individual Roth 401k) have a provision for early withdrawals without penalties (except in an extraordinary circumstance). Is this what others have found?

Eg, I know there are provisions after leaving a company as an employee, to transfer the Roth 401k/403b to a Roth IRA, and after 5 yrs one can withdraw the money without penalty. But does anything like that exist for a 1099 business (with any legal/tax structure)? I would be the sole proprietor/employee/owner.

[unemployable]

Do mean 1099 income you've placed into a retirement vehicle such as a Keogh or SIMPLE plan?

Are you familiar with 72t withdrawals, also known on the internets as SEPPs (substantially equal periodic payments)?

[CS]

You could always roll it into an IRA and then 72t it. The legal protections for solo 401k/solo business retirement plans are not that strong anyhow it seems.

Also, I so so so recommend the Solo 401k. For several years I used a SEP and missed out on all those sweet sweet employee contributions. Oh the stupid extra tax I paid.

[trfie]

You could always roll it into an IRA and then 72t it. The legal protections for solo 401k/solo business retirement plans are not that strong anyhow it seems.

Also, I so so so recommend the Solo 401k. For several years I used a SEP and missed out on all those sweet sweet employee contributions. Oh the stupid extra tax I paid.

Do mean 1099 income you've placed into a retirement vehicle such as a Keogh or SIMPLE plan?

Are you familiar with 72t withdrawals, also known on the internets as SEPPs (substantially equal periodic payments)?

No, I hadn't heard of 72t, thanks for the input; it does look like I can create a solo Roth 401k, later convert it to an IRA, and then use 72t or another provision. I haven't done anything yet so I don't have a Keogh or SIMPLE.

[unemployable]

72t's are an excellent way to fund relatively minor, ongoing expenses. They are a not-so-effective way to fund larger expenses such as a house or to "take money" out of tax-deferred vehicles to reallocate or spend somewhere else.

If you foresee a need to spend a large amount of tax-deferred money in the medium-term future (5+ years but before age 59½), I would look into Roth conversion ladders.

[CS]

The five year clock starts ticking with the first Roth account opened outside a 401k plan so if you don't have an individual Roth account, opening one right away would be a good idea.

The rules are complex. I was going to say you could take the entire principle, but I'm finding conflicting information.